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 12%, 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 Leslie accumulate in three years by depositing $720
at the beginning of each of the next 12 quarters?
(Round your interest rate to 1 decimal place.)
Quarterly deposit = $720
Interest rate = 12%
Quarterly interest rate (i) = 12/4
= 3%
Time period (n) = 12 quarters
Future value of deposit = Quarterly deposit x Future value annuity due factor (i%, n)
= 720 x Future value annuity factor (3%, 12)
= 720 x 14.6178
= $10,524.8 (rounded to one decimal)
= $10,525 (rounded to whole dollar)
Leslie accumulate in three years = $10,524.8 (rounded to one decimal)
= $10,525 (rounded to whole dollar)
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