Question

At the end of each quarter, Patti deposits $1,100 into an account that pays 12% interest compounded quarterly. How much will Patti have in the account in 4 years

Answer 1

Patti will have approximately $22,172.56 in the account after 4 years.

Step-by-step explanation:

To calculate the future value of Patti's account, we can use the formula for an annuity with quarterly compounding:

Future Value = Payment x ((1 + Interest Rate)^n - 1) / Interest Rate

Where:

Payment = $1,100

Interest Rate = 12% / 4 = 3% per quarter

n = Number of quarters = 4 years * 4 quarters/year = 16 quarters

Plugging in the values, we get:

Future Value = $1,100 x ((1 + 0.03)^16 - 1) / 0.03

Future Value ≈ $22,172.56

Therefore, Patti can expect to have approximately $22,172.56 in her account after 4 years at the current interest rate and deposit schedule.

Remember, this is an approximation due to rounding, and the actual amount may differ slightly.

Answer 2

Future value = $22172.56

Step-by-step explanation:

Below is the given values:

Deposit made at the end of each quarter = $1100

Interest rate = 12% or 12% / 4 = 3%

Number of year = 4years

Number of compounding period = 4 x 4 = 16

Future value = Annuity x [ (1 + r)^n - 1] / r

Future value = $1100 x [ (1 + 3%)^16 - 1] / 3%

Future value = $22172.56