Question

Jack and Rebecca Pearson just had triplets. They want to have enough money for their

children's college fund. So they decide to deposit $100 at the end of each quarter for 20
years into an account paying 4.2% annual interest compounded quarterly.


a) How much is in the account at the end of 20 years?


b) How much did the Pearsons actually contribute to the college fund account?


c) How much interest did the account earn in those 20 years?

Answer 1

a) $12,440.43

b) $8,000.00

c) $4,440.43

Explanation:

the question is a bit ambiguous, I calculated from zero initial Deposit to $100 per quarter. If they deposited $100 initially and then $100 quarterly for 20 years then the numbers are as follows.

a) $12,671.05

b) $8,100

c) $4,571.05

Answer 2

a) $12,440.43

b) $8,000.00

c) $4,440.43

Explanation:

the question is a bit ambiguous, I calculated from zero initial Deposit to $100 per quarter. If they deposited $100 initially and then $100 quarterly for 20 years then the numbers are as follows.

a) $12,671.05

b) $8,100

c) $4,571.05