Question

Alba is Saving for a big overseas trip she hopes to take her senior year in college , which is four years away . She plans to deposit 10,000 at the end of each quarter in an account earning 8% annual interest , compounded quarterly . How much money will alba have for trip after 20 years ?

Answer 1

FV= $1,937,719.58

Explanation:

Giving the following information:

Quarter deposit= $10,000

Number of periods= 20*4= 80

Interest rate? 0.08/4= 0.02

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

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

A= quarter deposit

FV= {10,000*[(1.02^80) - 1]} / 0.02

FV= $1,937,719.58