Harry Morgan plans to make 30 quarterly deposits of $200 into a savings account. The first deposit will be made immediately. The
savings account pays interest at an annual rate of 8%, compounded quarterly. How much will Harry have accumulated in the savings account at the end of the seven and a half-year period? (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.)
1 answer:
Answer:
Amount in savings account after 7 and a half years is $8,113.62
Explanation:
Given:
Quarterly payments made in savings account (pmt) = $200
Annual interest rate = 8%
Quarter interest rate (rate) = 8÷4 = 2%
Compounding period (nper) = 7 and a half years or 7.5×4 = 30 quarterly payments
This is an annuity as uniform amount of $200 is deposited every quarter.
Savings at the end of seven and a half years mean future value of annuity.
Future value of annuity can be computed using spreadsheet function =FV(rate, nper,pmt,PV)
Savings account will have $8113.62 at the end of seven and a half years.
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