Question

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

Answer 1

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