I\'m currently studying compound interest formulas. I was able to get the answer

Question

I'm currently studying compound interest formulas. I was able to get the answer to the question using basic math skills. However, as I move onto problems harder than this, I will need to be able to execute the applicable formulas. Can someone show me how to answer this problem using compound interest formulas? It's straight-forward until the question brings up an add'l deposit at the end of the year. I'm not sure when/where to plug that into the formula(s).   

You have $10 to invest in a savings account. The account earns 5% interest compounded annually, and you plan to deposit $5 at the end of each year for the next four years. Assuming you make only 3 yearly deposits, how much will be in the account at the end of 4 years?

Explanation / Answer

amount invested = $ 10

rate of interest = 5% compunded annually

time = 4 years

total = compound interest on the principal + future value of a series

total = p ( 1+r/n)^nt + [pmt ( 1 + r/n)^nt -1 ) / r/n ]

= 10 ( 1 + .05)^4 + [ 5 ( 1+ .05 )^3 -1 ) / .05

= 12.16 + 15.7625

= $ 27.92

so there will be $ 27.92 at teh end of 4 years

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