A bank account with a $75,000 initial deposit is used to make annual payments of $1000, starting one year after the initial $75,000 deposit. Interest is earned at 2% a year, compounded annually, and paid into the account right before the payment is made.
a) What is the balance in the account right after the 24th payment?
How would we find this out without actually calculating the problem 24 times. There must be a formula to this geometric problem.
I have tried the formula S_n = a(1-r^n)/1-r, with a = 75000m, r = 1.02, n = 26 but to no avail. The answer that it comes out to be is way to high to be reasonable. (Answer from the formula is 2.5 million)
What would be the correct formula to use in this problem to solve for the balance in the account right after the 24th payment? Thanks in advance.