Question

You just deposited $4,000 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly. If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now?

Answer 1

Total FV= $17,726.11

Step-by-step explanation:

To calculate the total Future Value, we need to use the following formula one each deposit:

FV= PV*(1+i)^n

i= 0.04 / 4= 0.01

Deposit 1:

FV= 4,000*(1.01^12)

FV= $4,507.3

Deposit 2:

FV= 5,000*(1.01^8)

FV= 5,414.28

Deposit 3:

FV= 7,500*(1.01^4)

FV= 7,804.53

Total FV= $17,726.11