Question

1000 is invested every 3 months at 4.8 compounded quarterly how much will the annuity weight due in 2 years

Answer 1

The amount due in 2 years for the annuity will be approximately $8,991.32.

How to calculate the amount

To calculate the amount that will be due in 2 years for an annuity where $1000 is invested every 3 months at a 4.8% interest rate compounded quarterly, use the formula for the future value of an ordinary annuity:

`FV = P * [(1 + r)^n - 1] / r`

Where:

FV = Future value of the annuity

P = Periodic payment (amount invested every 3 months)

r = Interest rate per compounding period (quarterly interest rate)

n = Number of compounding periods (number of 3-month periods in 2 years)

Given:

P = $1000

r = 4.8% or 0.048 (expressed as a decimal)

n = 2 years / 3 months = 8 periods

Substituting the values into the formula:

FV = 1000 *
`[(1 + 0.048)^8 - 1]` / 0.048

Calculating the equation:

FV = 1000 *
`[(1.048)^8 - 1]`/ 0.048

FV = 1000 * [1.431563119 - 1] / 0.048

FV = 1000 * 0.431563119 / 0.048

FV ≈ 1000 * 8.99131665

FV ≈ 8,991.32

Therefore, the amount due in 2 years for the annuity will be approximately $8,991.32.