Andy C. answered • 11/06/17

Math/Physics Tutor

The regular compound interest formula does not

work because there are annual deposits.

The formula is at : http://www.moneychimp.com/articles/finworks/fmbasinv.htm

It is P(1 + r)^t + c[ ((1 + r)^t - 1) / r ]

where P is the starting principal, r is the interest rate, c is the regular deposit, and t is the time.

For this problem:

P = c = $5000 , the annual deposit

r=9%, so 100% + 9% = 109% = 1.09

t = 10 years

5000(1.09)^10 + 5000 ( (1.09)^ 10 - 1.)/.09) = 87801.46