Question

Monica deposited $760 into an ordinary annuity after each quarter for 2 years at 4% interest compounded quarterly. Determine the (a) future value of each account and (b) the total interest amount earned.

Answer 1

FV=$823.004

Total interest earned=$63.004

Explanation:

FV=PV×(1+i/n)^nt

PV=$760

I=4%

t=2 years

n=4

FV=760+(1+0.04/4)^4*2

=760+(1+0.01)^8

=760+(1.01)^8

=760+(1.0829)

=823.004

FV=$823.004

Total interest amount earned

=FV-PV

=$823.004-760

=$63.004