Joe th plumber opened an investment account that pays him 10% compounded annually. Joe decided that he is going to deposit $1 at the end of the first year, then double it every year thereafter, i.e., $2, $4, $8.....etc. for 20 years. How much money will Joe have in his account after 20 years?. Any help would be great and thanks.
Joe th plumber opened an investment account that pays him 10% compounded annually. Joe decided that he is going to deposit $1 at the end of the first year, then double it every year thereafter, i.e., $2, $4, $8.....etc. for 20 years. How much money will Joe have in his account after 20 years?. Any help would be great and thanks.
The solution to this kind of problem is very similar to summing up a geometric series. The only difference is that you have to increment each term and the cumulative terms by the interest rate paid, in this case being 10%. Summing up the whole thing term by term is cumbersome. There is a rather involved formula that solves these types of problems, but will not saddle you with it. I shall give you the answer to your question, and if your teacher or professor quibbles about it, then let us know and will try to help you out. Most likely, you will have it in your textbook. You just have to look it up.
At any rate, Joe the plumber better have a lots of money in the 20th year, because that comprises about half of all his previous deposits!!. So, Joe should have saved a total of $1,165,076.97 in his investment account.
