Question

To save money for his daughter's college tuition, Pablo invests $279 every quarter in an annuity that pays 6% interest, compounded quarterly. Payments will be made at the end of each quarter. Find the total value of the annuity in 22 years. Do not round any intermediate computations, and round your final answer to the nearest cent

Answer 1

`~~~~~~~~~~~~\stackrel{\textit{payments at the end of the period}}{\textit{Future Value of an ordinary annuity}} \\\\ A=pymnt\left[ \cfrac{\left( 1+(r)/(n) \right)^(nt)-1}{(r)/(n)} \right] \\\\\\ ~~~~~~ \begin{cases} A=\textit{accumulated amount}\\ pymnt=\textit{periodic payments}\dotfill &279\\ r=rate\to 6\%\to (6)/(100)\dotfill &0.06\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{quarterly, thus four} \end{array}\dotfill &4\\ t=years\dotfill &22 \end{cases}`

`A=279 \left[ \cfrac{\left( 1+(0.06)/(4) \right)^(4 \cdot 22)-1}{(0.06)/(4)} \right]\implies A=279\left[\cfrac{1.015^(88)~~ - ~~1}{0.015} \right] \\\\[-0.35em] ~\dotfill\\\\ ~\hfill A\approx 50348.47~\hfill`