Question

A woman intends to save each quarter to purchase a car in 4 years at a...

A woman intends to save each quarter to purchase a car in 4 years at a cost of $20,000.

    Assume that her savings account earns an annual rate of return of 8%, compounded quarterly.

     [11 points]

            (a) Calculate the amount she must save at the beginning of each quarter.

                  in correct sequence) that would solve for her required amount.

                                                                                                                                                          

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Answer #1

  

_______________________________

_______________________________

Future Value Annuity =

r = 0.08 / 4 = 0.02

n = 4 years * 4 = 16

20,000 =

20,000 = Periodic Payment * 19.0120709565

Periodic Payment = 20,000 / 19.0120709565

Periodic Payment = 1051.96

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