Question

Nancy Sellers has been investing $1,000 quarterly for the past 15 years in an equity mutual fund. How much is the fund worth now assuming she has earned 15% compounded quarterly on her investment

Answer 1

The value of the investment is  $216,136.90.

What is the value of the investment?

The formula that can be used to determine the value of the investment is:  A x annuity factor

Annuity factor = [(1 + r)^mn] - 1] / r

Where:

• A = amount deposited quarterly = $1000
• r = interest rate = 15% / 4 = 3.75%
• m = number of compounding = 4
• n = number of years = 15

Annuity factor =[ (1.0375)^60 - 1] / 0.0375 = 216.136896

Amount = 216.136896 x $1000 = $216,136.90

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