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Javier deposits today, March 26, 2014, $20,000. He plans to deposit $50,000 on September 28, 2014, and on March 26, 2015, he will deposit $30,000.

a) How much will you have saved on March 26, 2016 with an annual interest rate of 18%, compounded quarterly?

User Ilj
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Final answer:

Javier will have $117,029.40 saved on March 26, 2016 with an annual interest rate of 18%, compounded quarterly.

Step-by-step explanation:

To calculate the amount Javier will have saved on March 26, 2016, we need to calculate the compound interest for each deposit separately and then add them together.

For the first deposit of $20,000, the time period is 2 years (2014 to 2016), the interest rate is 18%, compounded quarterly. We can use the formula A = P(1 + r/n)^(nt), where A is the amount after time t, P is the principal (initial amount), r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. Plugging in the values, we have A = 20,000(1 + 0.18/4)^(4*2) = $23,942.40.

For the second deposit of $50,000, the time period is 1 year (2014 to 2015), the interest rate is 18%, compounded quarterly. Using the same formula, we have A = 50,000(1 + 0.18/4)^(4*1) = $58,172.50.

For the third deposit of $30,000, the time period is 1 year (2015 to 2016), the interest rate is 18%, compounded quarterly. Again, using the same formula, we have A = 30,000(1 + 0.18/4)^(4*1) = $34,914.50.

Finally, adding all the amounts together, Javier will have $23,942.40 + $58,172.50 + $34,914.50 = $117,029.40 saved on March 26, 2016.

User Rjoshi
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