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 16%, 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 $520 at the end of each of the next 12 quarters, beginning three months from now

Answer 1

Answer:

$7,813.52

Explanation:

future value = quarterly contribution x annuity factor

quarterly contribution = $520

total quarterly contributions = 3 x 4 = 12 periods

interest rate = 16% / 4 = 4% compounded quarterly

future value annuity factor, 4%, 12 periods = 15.026

future value = $520 x 15.026 = $7,813.52