You just deposited $2,500 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly. If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now? a. $17,679.55 b. $16,837.67 c. $18,563.53 d. $15,234.08 e. $16,035.88
Ans e $16035.88
| FV = | Future Value | |
| PV = | Present Value | |
| r = | rate of interest | |
| n= | no of period | |
| 1st Investment | ||
| a | FV = | PV (1 + r )n |
| FV = | 2500*(1+4%/4)^12 | |
| FV = | 2817.06 | |
| 2nd Investment | ||
| b | FV = | PV (1 + r )n |
| FV = | 5000*(1+4%/4)^8 | |
| FV = | 5414.28 | |
| 3rd Investment | ||
| c | FV = | PV (1 + r )n |
| FV = | 7500*(1+4%/4)^4 | |
| FV = | 7804.53 | |
| TOTAL FUTURE VALUE = | 2817.06 + 5414.28 + 7804.53 | |
| 16035.88 |
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