Question

Answer each of the following questions.

1. Find the accumulated value of payments of $200 made at the end of every 3 months
for 12 years if money is worth 5% compounded quarterly. Reference Framno 11.72

Answer 1

$13,045.68

Explanation:

The future value of an annuity is given by the formula ...

A = P((1 +r/n)^(nt)-1)/(r/n)

where r is the annual interest rate, n is the number of times it is compounded per year, and t is the number of years.

Filling in the given numbers, we have ...

A = $200((1+.05/4)^(4*12) -1)/(.05/4) ≈ $13,045.68

After 12 years, the accumulated value is $13,045.68.