Question

Miguel wants to save money to open a tutoring center. He buys an annuity with a quarterly payment of $39 that pays 3% interest, compounded quarterly. Payments will be made at the end of each quarter. Find the total value of the annuity in 8 years.Do not round any intermediate computations, and round your final answer to the nearest cent.

Answer 1

Given

Quarterly payment = $39

Rate = 3%

Time = 8 years

Find

total value of the annuity in 8 years.

Step-by-step explanation

Total value is given by

`\begin{gathered} FV=39([1+(0.03)/(4)]^(4*8)-1)/((0.03)/(4)) \\ FV=39*(0.2701112243174)/(0.0075) \\ FV=1404.57836645\approx1404.6 \end{gathered}`

Final Answer

Therefore, the total value of the annuity in 8 years