Question

Mr. Chang wants to retire in 10 years. He deposits $650.00 every three months into his retirement investment account. If the account's interest rate is 7.8% compounded quarterly, how much will he have at the end of 5 years, when 20 quarterly deposits of $650.00 have been made?

Give answer in US dollars and cents rounded to the nearest cent (do NOT enter "$" sign)

Answer 1

Mr. Chang will have 15714.90 dollars.

Explanation:

p = 650

r =
`7.8/4/100=0.0195`

Number of periods or n =
`5*4=20`

Future value formula is :
`p[((1+r)^(n)-1)/(r) ]`

Putting the values in formula we get;

`650[((1+0.0195)^(20)-1)/(0.0195) ]`

= $15714.90

Hence, Mr. Chang will have 15714.90 dollars.