You are depositing $100 every month starting today (month 0) into a savings account that returns...
You are depositing $100 every month starting today (month 0) into a savings account that returns 8% APR, compounded quarterly (every three months). How much money would be in the account after three years? Assume no inter-period compounding.
Homework Answers
Quarterly (nominal) interest rate = 8%/4 = 2%
Quarterly deposit = $100 x 3 = $300
Number of quarters = 3 x 4 = 12
Future value = $300 x F/A(2%, 12) x 1.02# = $300 x 13.4121** x 1.02 = $4,104.10
#Since first payment is made at beginning of month, a factor equal to (1 + quarterly interest rate) is multiplied
**From F/A Factor table
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