Question

15. Determine the future value of $4,000 deposited into an ordinary

annuity after each quarter for 3 years at 6% interest compounded
quarterly. (Lesson 5.8)

Answer 1

The future value of investment at 6 % compounded quarterly is $ 4782.472

Explanation:

Given as :

The principal amount = $ 4000

The rate of interest compounded quarterly = 6 %

The time period = 3 years

Let The future amount = A

From Compounded method

Amount = Principal ×
`(1+(\textrm rate)/(4* 100))^(4* \textrm time)`

Or, Amount = 4000 ×
`(1+(\textrm 6)/(4* 100))^(4* \textrm 3)`

Or, Amount = 4000 ×
`(1.015)^(12)`

Or, Amount = 4000 × 1.195618

∴ Amount = $ 4782.472

Hence The future value of investment at 6 % compounded quarterly is $ 4782.472 Answer