Question

Gerry deposits $2000 at the end of every 3-month period in a fund earning interest at...

Gerry deposits $2000 at the end of every 3-month period in a fund earning interest at j2=8%. If the fund pays simple interest for the fractional part of any interest period, what is the accumulated value of Gerry's deposits at the end of 5 years? *Please show all work and do not round intermediate answers*

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Answer #1

Period of deposit = 5 years

Number of deposits per year = 12 / 3 = 4

Period = 5 * 4 = 20

Deposit per period = $2,000

Interest rate = 8%

Period Beginning Bal Interest (8%) Investment at the end Ending Bal
1 2000
2 2000 40 2000 4000
3 4000 80 2000 6000
4 6000 120 2000 8000
5 8000 160 2000 10000
6 10000 200 2000 12000
7 12000 240 2000 14000
8 14000 280 2000 16000
9 16000 320 2000 18000
10 18000 360 2000 20000
11 20000 400 2000 22000
12 22000 440 2000 24000
13 24000 480 2000 26000
14 26000 520 2000 28000
15 28000 560 2000 30000
16 30000 600 2000 32000
17 32000 640 2000 34000
18 34000 680 2000 36000
19 36000 720 2000 38000
20 38000 760 2000 40000
7600

Accumulated Value of deposits

= Interest Portion + Deposits made

= $7,600 + $40,000

= $47,600

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