Engineering economics homework help
Im looking to get some help with a few questions from an engineering economics course. In particular im hung up on the following question:
Lenny's parents have decided to deposit money every month a bank account with interest rate of 10.39% per month. Lenny can take the money out as a reward for completing his university degree. Suppose Lenny will complete his degree 22 years from today. The parents will proceed to deposit 686.76 dollars at the end of month one and then will increase the deposit amount by 174.27 until Lenny's graduation. How much money will be deposited by Lenny's parents at the end of month 32?
1) is it true that the amount im looking for does not include interest?
2) i know this is a arithmetic gradient because of the constant increase each month, but what im not sure of is how to calculate the amount of the gradient because of question 1. If this does not include interest then the gradient formula i have is undefined since the denominator would be 0.
I used the following formula:
(p/g,i,n) = (1+i)^n -in -1 / (i^2)(1+i)^n
where n is the number of peroids
i is the interest rate
Thank you for your help.