Victor French made deposits of $4,000 at end of each quarter to Book Bank, which

Question

Victor French made deposits of $4,000 at end of each quarter to Book Bank, which pays 8% interest compounded quarterly. After 5 years, Victor made no more deposits. What will be the balance in the account 4 years after the last deposi? (Use the Table and Table 12.1.)(Do not round intermediate calculations. Round your answer to the nearest cent Account balance TABLE 12.1 Future vake of S1 at compound inerest 12.1 Fuure vale of 1 compound Interest als ils 001 10002 104041069 1.1236114 64 1101 12100 2 6858 34 1.4002 162 1790 2447 13 1461 2 39530544304545 303 14 174 33213 2M 173154822362197182100

Explanation / Answer

Step-1:Future Value of quarterly deposit for 5 years Future Value = Quarterly deposit x Future Value of annuity of $1 = $             4,000 x 24.2974 = $     97,189.48 Future Value of annuity of $ 1 = (((1+i)^n)-1)/i Where, = (((1+0.02)^20)-1)/0.02 n = 5*12/3 = 20 =    24.2974 i = 8%*3/12 = 0.02 Step-2:Future value of above amount for 4 Years Future Value = above amount x Future Value of $ 1 = $           97,189 x 1.3728 = $ 1,33,420.33 Future Value of $ 1 = 1.02^16 Where, = 1.3728 n = 4*12/3 = 16 i = 0.02

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