you would like to contribute to a savings account over the next three years in order to accumulate enough money to take a trip to europe. assume an interest rate of 4%, compounded quarterly. how much will accumulate in three years by depositing $500 at the end of each of the next 12 quarters?

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21-10-2022
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you would like to contribute to a savings account over the next three years in order to accumulate enough money to take a trip to europe. assume an interest rate of 4%, compounded quarterly. how much will accumulate in three years by depositing $500 at the end of each of the next 12 quarters?

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Qwclear Qwclear · Answer 1 · 2022-10-26T15:38:47+02:00

The amount after three years will be equal to $7513.

Compound Interest is the interest which is charged on an entity by any institution in which the amount received after one year becomes the principal amount for next year. We know that

Future amount = quarterly contribution x annuity factor

Now, the quarterly contribution is equal to $500, the total quarterly contributions is 3 x 4 = 12 periods, the interest rate is 4% compounded quarterly and the annuity factor is 4%, 12 periods = 15.026

Now, Future value = quarterly contribution x annuity factor

Future value = $500×15.026

Future value = $7513 which is the required amount.

Learn more about Compound Interest at:

brainly.com/question/17308622

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