Question

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

Answer #1

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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