Question

# Leslie McCormack is in the spring quarter of her freshman year of college. She and her...

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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