Leslie McCormack is in the spring quarter of her freshman year of college. She a
ID: 2704436 • Letter: L
Question
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
How much will she accumulate in three years by depositing $400 at the end of each of the next 12 quarters, beginning three months from now?
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. How much will she accumulate in three years by depositing $400 at the end of each of the next 12 quarters, beginning three months from now?Explanation / Answer
We have n=12 period, Qtry deposit =PMT=400, i=6% qtrly
What is Maturity value FV
We have ANnuity of PMT = 400 for n=12 period at i=6%/4
So FV = PMT*FVA(6%/4,12)
ie FV = 400*13.0412 = $5,216.48
As the deposit started 3 months from Today, this Fv is still after 12 Qtr. So no correction is reqd. It is a Trick question to test the student knowledge
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