Question

Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 12%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) How much will she accumulate in three years by depositing $460 at the end of each of the next 12 quarters, beginning three months from now

Answer 1

$6,528.33

Step-by-step explanation:

The amount she would accumulate can be determined using the future value formula in excel which is given thus:

=fv(rate,nper,-pmt,pv))

the rate applicable is the interest rate per quarter which is the annual rate of interest of 12% divided by 4 quarters in a year i.e 3%

nper is 12 quarters

pmt is the amount deposited per quarter which is $460

pv is the present of all deposits made in 12 quarters which is unknown

=fv(3%,12,-460,0)=$ 6,528.33