Question

you have savings of $100. you plan to save another $100 at the beginning of each year for 5 years. The account pays annual intrest of 8 percent, coumpounded quarterly. the ending balance (pincipal plus interest) will be $ at the end of 5 years?

Answer 1

$638.10

Explanation:

= $100 (1 + 2/100)^4

= $100 (1 + 0.02)^4

= $100* 1.0824

= $108.24

For the second year = $100+ $108.24= $208.24

= $ 208.24 * 1.0824

= $225.41

For the third year = $100 + $ 225.41 = $325.41

= $325.41 * 1.0824

= $352.23

For the fourth year = $100 + $ $352.23 = $452.23

= $452.23 * 1.0824

= $ 489.51

For the fifth year = $100+ $489.51 = $589.51

= $589.51 * 1.0824

= $ 638.10