Final answer:
The value of the Sebastopol tree farm owner's account after 8 years of making $650 quarterly deposits with an interest rate of 1.25% compounded quarterly can be determined using the future value of an annuity formula for compounded interest.
Step-by-step explanation:
The value of the account at the end of 8 years for an owner of Sebastopol tree farm who deposits $650 at the end of each quarter into an account paying 1.25% interest compounded quarterly can be calculated using the future value of an annuity formula for compound interest.
The formula for the future value of an annuity compounded quarterly is:
A = P × [ (1 + r/n)^(n*t) - 1 ] / (r/n)
Where:
- A is the future value of the annuity.
- P is the payment amount per period, which is $650.
- r is the annual interest rate, which is 1.25%.
- n is the number of times interest is compounded per year, which is 4 (quarterly).
- t is the number of years the money is deposited or invested, which is 8 years.
By substituting the values into the formula, we calculate the account's future value after 8 years.