Beverly Hills started a paper route on January 1, 2004. Every three months, she

Question

Beverly Hills started a paper route on January 1, 2004. Every three months, she deposits $1,300 in her bank account, which earns 8 percent annually but is compounded quarterly. On December 31, 2007, she used the entire balance in her bank account to invest in an investment at 10 percent annually. How much will she have on December 31, 2010? Use Appendix A and Appendix C. (Round "FV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)

Future value $

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Nper = (2007 - 2004)*4 = 12 (indicates the period)

Rate = 8%/4 (indicates quarterly rate of interest)

PMT = 1300 (indicates the payment)

PV = 0 (indicates present value if any)

FV = ? (indicates future value at the end of 2010)

Future Value at the End of 2010 = FV(Rate,Nper,PMT,PV)*(1+.10)^3 = FV(8%/4,12,1300,0)*(1+.10)^3 = $23206.78

Answer is $23206.78.

Thanks.

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