An investor needs $11 comma 000 in 12 years. (a) What amount should be deposited in a fund at the end of each quarter at 5% compounded quarterly so that there will be enough money in the fund? (b) Find the investor's quarterly deposit if the money is deposited at 7.8% compounded quarterly. Round both to the nearest cent
a.Information provided:
Future value= $11,000
Time= 12 years*4= 48 quarters
Quarterly interest rate= 5%/4= 1.25%
The amount of quarterly deposit is calculated by entering the below in a financial calculator:
FV= -11,000
N= 48
I/Y= 1.25
Press the CPT key and PMT to compute the monthly mortgage payment.
The value obtained is 168.64.
Therefore, the amount of quarterly deposit is $168.64.
b.Information provided:
Future value= $11,000
Time= 12 years*4= 48 quarters
Quarterly interest rate= 7.8%/4= 1.95%
The amount of quarterly deposit is calculated by entering the below in a financial calculator:
FV= -11,000
N= 48
I/Y= 1.95
Press the CPT key and PMT to compute the monthly mortgage payment.
The value obtained is 140.48.
Therefore, the amount of quarterly deposit is $140.48.
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