Lifetime savings accounts, known as LSAs, would allow people to invest after-tax money without being taxed on any of the gains. If an engineer invests $10,000 now and $10,000 each year for the next 20 years, how much will be in the account immediately after the last deposit if the account grows by 15% per year?

Final value = $1,178,101.20

Explanation:

Giving the following information:

If an engineer invests $10,000 now and $10,000 each year for the next 20 years, how much will be in the account immediately after the last deposit if the account grows by 15% per year?

We need to use the following formula for Final value with annual deposit:

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

FV = {10000*[ (1.15^20) - 1]}/0.15 = 1,024,435.83

This is the amount accumulated if the deposits were at the end of the year. We need to add an entire interest for one deposit (without the principal)

1,024,435.83 + [ (10000*1.15^20 - 10000) ] = $1,178,101.20