Question

Suppose you save for a down payment on a house by investing $1200 each quarter into an account that gives 3.6% annual interest, compounded quarterly (four times a year). How much will you have after 5 years?

Answer 1

FV= $26,167.17

Step-by-step explanation:

Giving the following information:

Quarterly deposit= $1,200

i= 0.036/4= 0.009

n= 5*4= 20

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= quarterly deposit

FV= {1,200*[(1.009^20) - 1]} / 0.009

FV= $26,167.17