Question

To offer scholarships to children of employees, a company invests $13,000 at the end of every three months in an annuity that pays 10.5% compounded quarterly. How much will the company have saved after 2 years of making these investments?

Answer 1

The company will have saved approximately $14,483.42 after 2 years of making these investments.

Step-by-step explanation:

To calculate the amount the company will have saved after 2 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the future value, P is the principal investment, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, the principal investment is $13,000, the interest rate is 10.5% or 0.105, the interest is compounded quarterly, and the number of years is 2.

Plugging the values into the formula, we get:

A = 13000(1 + 0.105/4)^(4*2)

A = 13000(1 + 0.02625)^8

A ≈ $14483.42