Question

If you make quarterly payments of $388.00 into an ordinary annuity earning an annual interest rate of 5.92%, how much will be in the account after 3 years? (Note: Your answer is a dollar amount and should include a dollar sign)

Answer 1

Here, We have to calculate the future value of $388 Deposit at 5.9% Interest rate compounded quarterly

Interest rate (r) =5. 9% / 4 = 1.475 per Quarter

Period (n) = 3 Years x 4 = 12

Future Value = Present Value x ( 1+r)ⁿ

                      = $388 x (1+.01475) ¹²

                      = $388 x 1.1921

                      = $462.5348

At the end of 3 years from today, We will have an amount of $462.5348 in the account