Question

megan invests $1,200 each year in an ira for 12 years in an account that earned 5% compounded annually. at the end if 12 years she stopped making payments to the account but continued to invest her acchnukated amount at 5% compounded annually for the next 11 years

Answer 1

Part A (annual payments)
Future value (after 12 years)
FV= A(1+R+R^2+...R^(n-1) )
=AR^n/(R-1)
=AR^n/i
A=annual payment
i=annual interest rate, compounded yearly
R=1+i
(Here A=$1200, i=0.05, R=1.05, n=12)
 
Part B (initial deposit, compound interest)
Future value (after 11 years) = FV* R^n
Here
FV=result from part A R=1.05
n=11 (years)