A series of equal quarterly payments of $10,000 for 15 years is equivalent to what future worth amount at an interest r...

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A series of equal quarterly payments of $10,000 for 15 years is equivalent to what future worth amount at an interest rate of

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Answer 1

Answer #1

Quarterly Payment = $10,000

Time Period = 15 years

Interest Rate = 9%

a.

Calculating Future Value,

Using TVM Calculation,

FV = [PV = 0, T = 60, PMT = 10,000, I = 0.09/4]

Future Value = $1,244,504.35

b.

Converting Monthly Rate to Quarterly Rate,

EAR = (1 + 0.09/12)¹² - 1 = 9.38%

Converting to Quarterly Rate,

APR(Quarterly) = 4((1 + 0.0938)^1/4 - 1)

APR(Quarterly) = 9.067%

Calculating Future Value,

Using TVM Calculation,

FV = [PV = 0, T = 60, PMT = 10,000, I = 0.09067/4]

Future Value = $1,251,865.81

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Answer 2

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