Question

Matt Johnson delivers newspapers and is putting away ​$35 at the end of each quarter from his paper route collections. Matt is 11 years old and will use the money when he goes to college in 7 years. What will be the value of​ Matt's account in 7 years with his quarterly payments if he is earning 7​% ​(APR), 10 % ​(APR), or 14.5 % ​(APR)? What will be the value of​ Matt's account in 7 years with his quarterly payments if he is earning 7​% ​(APR)?

Answer 1

Rate = 7%
Amount deposited each quarter				35
Annual rate f interest =7%
Quarterly rate of interest = 7/ 4 = 1.75%
Annuity FVF at 1.75% for 28 periods				35.73788
Amount in account at the end of 7 yrs				1250.826
Rate =10%
Amount deposited each quarter				35
Annual rate f interest =10%
Quarterly rate of interest = 10 / 4 = 2.50%
Annuity FVF at 2.5% for 28 periods				39.8598
Amount in account at the end of 7 yrs				1395.093
Rate = 14.50%
Amount deposited each quarter				35
Annual rate f interest =14.50%
Quarterly rate of interest = 14.50 / 4 = 3.625%
Annuity FVF at 3.625% for 28 periods				47.17894
Amount in account at the end of 7 yrs				1651.263