Question

1P Find the future value of $1,300 deposited at the end of every three months, for 3 years if the bank pays 12% interest, compounded quarterly. a) $18,955.20 b) $18,003.13 C) $18,449.64 d) $18.830.22

Answer 1

There are 4 quarters in a year comprising of 3 months each .

Quarterly Interest rate = 12 / 4 = 3%

Number of quarters = 3 years * 4 quarters = 12

Future value = Amount * FVA3%,12

                 = 1300 * 14.19203

                 = $ 18449.64

Correct option is "C" - 18449.64

#Find future value annuity factor from future value annuity table (ordinary) at 3% for 12 periods.