I have a problem to calculate future value of this problem:
"The parents of a newborn baby set up an account to cover the cost of college they deposited 1,500 every birthday in an account that pays 8%. When she get 12th, it increased to 3,000 per birthday."
I need calculate the amount available to her at age 18:
Future value from 0 to 11
$F_1=1500[\frac{(1+0.08)^{11}-1}{0.08}]=24,968.23$
Future value from 12 to before 18
$F_2=3000[\frac{(1+0.08)^{7}-1}{0.08}]=26,768.41$
but $F_1$ grow up from 12 to before 18 then:
$F_3=24,968.23(1+0.08)^{7}=42,791.16$
Then te amount available is $42,791.16+26,768.41= 69,559.57$
I don't understand why my in my book adds this:
$F_4=1500(1+0.08)^{18}=5,994.02$
Please help me!!!
From the question it is unclear if the parents deposited 1,500 on the day of birth. If they did that would explain $F_4$.