A man invests 1000 at the beginning of each year into a fund that pays an annual interest rate of 5.6%. The annual interest payments are deposited into a fund that pays 6.2% annually. What is his total accumulation at the end of 10 years?
I thought that the way to solve this problem was:
But the answer in the back of my book says that the the annuity is increasing, but I don't understand how.
The amount of interest for year k is 1000k(0.056)=56k. The accumulation of these payments plus interest is 56(Is)10,0.06=3,730.48. Total accumulation is 13,730.48.
Can someone explain how that answer was achieved? Thanks.