Question

Marceille plans to save $50 every three months over the next 5 years. How much will be in her account when she makes the last deposit, if her account earns a nominal interest rate of 6 percent, compounded quarterly?

Answer 1

Answer:

amount = $1156.18

Explanation:

given data

save = $50

time = 5 year

interest rate = 6 percent

solution

here number of payment per annual will be 4

so interest rate per period will be

interest rate = $\frac{0.06}{4}$    .

interest rate = 1.50 %

and no of period will be = 5 × 4 = 20

and payment per period is $50

we apply here amount formula formula after 5 year

amount = payment per period × $\frac{(1+r)^t-1}{r}$   ....................1

amount = $50 ×  $\frac{(1+0.015)^{20}-1}{0.015}$  

amount = $1156.18