   SEARCH HOME Math Central Quandaries & Queries  Question from Carlos, a student: Hello, I am working on the question below for a class. I set up my formulas in Excel, but I get a different answer than the multiple choices. My answer is $9,364.80 What am I doing wrong? Question Suppose that you deposited$3,000 at the beginning of each year for three years in a savings account earning 4%. What is the account value after 3 years (approx)? a. 9,120 b. 9,211 c. 9,739 d. 9,989 My answer Future Value of Regular Annuities Payment $(3,000) Years 3 Annual Rate 4% Future Value$9,364.80 Your help is appreciated. Regards, Carlos Hi Carlos,

You didn't say anything about compounding so I tried first with simple interest, that is no compounding at all.

First deposit after 3 years: $3,000(1 + 3 × 0.04) Second deposit after 2 years:$3,000(1 + 2 × 0.04)
Third deposit after 1 years: $3,000(1 + 1 × 0.04) Summing these three values gave me$9,720. Not very close to any of the multiple choice options.

I tried again with the interest being compounded once a year.

First deposit after 3 years: $3,000(1 + 0.04)3 Second deposit after 2 years:$3,000(1 + 0.04)2
Third deposit after 1 years: $3,000(1 + 0.04) Summing these three values gave me$9,739.392 so I think the answer that is being sought is c.

Penny     Math Central is supported by the University of Regina and The Pacific Institute for the Mathematical Sciences.