Question

You deposit $500 today into a savings plan and deposit an additional $50 each quarter (starting in 3 months) for 25 years. If you earn 6.25% compounded quarterly, what will your balance be in 25 years?

Answer 1

The balance will be $14239.74.

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This is the sum of an amount ($500) accumulating interest for 25 years, and a series of $50 payments. The first amount is multiplied by (1 +.0625/4)^100, and the sum of payments is 50*((1 +.0625/4)^100 -1)/(.0625/4).