A 1000 is deposited into Fund X, which earns an annual effective rate of 6%. At the end of each year, the interest earned plus an additional 100 is withdrawn from the fund. At the end of 10th year, the fund is depleted. The annual withdrawals of interest and principal are deposited in Fund Y, which earns an annual effective rate of 9%. Determine the accumulated value of Fund Y at the end of Year 10.

The accumulated value of Fund Y at the end of Year 10 is $2,084.67.

Explanation:

Note: Find attached the excel file for the calculation of the accumulated value of Fund Y at the end of Year 10.

The accumulated value of Fund Y at the end of Year 10 is ending balance in year 10 which is in red color.

Also note the following from the attached excel file:

a) The ending balance of Fund X is 0.00 because Fund Y is depleted after Year 10.

b) The beginning balance of Fund Y and its earned interest are equal to 0.00, because no amount of money is deposite in Fund Y until after Year 1 which is the withdrawal from Fund X.

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