Question

Present and future value tables of $1 at 3% are presented below:

N	FV $1	PV $1	FVA $1	PVA $1	FVAD $1	PVAD $1
1	1.03000	0.97087	1.0000	0.97087	1.0300	1.00000
2	1.06090	0.94260	2.0300	1.91347	2.0909	1.97087
3	1.09273	0.91514	3.0909	2.82861	3.1836	2.91347
4	1.12551	0.88849	4.1836	3.71710	4.3091	3.82861
5	1.15927	0.86261	5.3091	4.57971	5.4684	4.71710
6	1.19405	0.83748	6.4684	5.41719	6.6625	5.57971
7	1.22987	0.81309	7.6625	6.23028	7.8923	6.41719
8	1.26677	0.78941	8.8923	7.01969	9.1591	7.23028
9	1.30477	0.76642	10.1591	7.78611	10.4639	8.01969
10	1.34392	0.74409	11.4639	8.53020	11.8078	8.78611
11	1.38423	0.72242	12.8078	9.25262	13.1920	9.53020
12	1.42576	0.70138	14.1920	9.95400	14.6178	10.25262
13	1.46853	0.68095	15.6178	10.63496	16.0863	10.95400
14	1.51259	0.66112	17.0863	11.29607	17.5989	11.63496
15	1.55797	0.64186	18.5989	11.93794	19.1569	12.29607
16	1.60471	0.62317	20.1569	12.56110	20.7616	12.93794

    
At the end of each quarter, Patti deposits $1,700 into an account that pays 12% interest compounded quarterly. How much will Patti have in the account in 4 years?

Answer 1

Patti have in the account in 4 years will be calculated using the future value formula or compound interest quarterly will be used.

Future value = Present Value ( 1   + r )ⁿ

Present value = $ 1700 (given)

r = 3% ( 12 % is annual interest for 3 months we will divide 12% / 4 it will be 3 %, we have divided by 4 because in a year 4 quarters are there)

n= no of period so 16 quarters in 4 years

Future value = 1700 ( 1   + 0.03 )¹⁶

Future value = 1700(1.03)¹⁶

Future value = 1700 ( 1.60471 )   

At Future value (1.03)¹⁶ will be 1.60471 as given above

Future value = $ 2728.007