Question

Suppose a young couple deposits $600 at the end of each quarter in an account that earns 7.2%, compounded quarterly, for a period of 4 years. How much is in the account after the 4 years? (Round your answer to the nearest cent.)

After the 4 years, they start a family and find they can contribute only $200 per quarter. If they leave the money from the first 4 years in the account and continue to contribute $200 at the end of each quarter for the next 18 1 2 years, how much will they have in the account (to help with their child's college expenses)? (Round your answer to the nearest cent.) $

Answer 1

Answer page; 01 initially p= $ 600 per quarter 1.7.20% per quarter => 710/4 = 0.072 = 0.018 :-0.018 na 4x4 = 16 quarters So future value [s=p( c1+i)n-1)/: S= 600€ 17 00:29":")/(0.032) =600 (( 440,022)-) 10.0727 -= 600 (1.018)".-) 10.033)

page:02 600 (1.33034-13 10.0721 = 600 (0.33034) 10.072) = 600 ( 0.33034) 10.018) - Goox 18.35222 = Ifol. 33 s -$11,0ll. 33 after 4 years sir future value (ofter 18.5 years) initial investment Si = s(1+i)? s, = (1,01. 23)(1+0.018)?4 =(11,011. 33)1.018779 =(11,011, 33) ( 3. 74399) since ( 18.5x4 =74 : Os

page :03 = 41226,394 = 41226. 39 P = 000 per quositer :- 7.24.14 per quarter no 18.5x4 = 14 quenter S2 = future value for fwither contribution S2 : 200 { [ 140.0183742,3/-0.018 . 2002 (1.0189**;} (0.18 = 200 ( 3.74399-1} 10.018 = 200 ( a. 74399) 0.018 = 200 X 52.44388 1 S2 = 30488.77 Total future value = Si #52 Total = 41226.39 + 30488.277 Total = $71715.16