Question

I am not sure what I am doing incorrectly.

W L C OS CO Work you have completed 50 var. It does not indicate completion. Return to question Mark Welsch deposits $7,100 in an account that earns interest at an annual rate of 4%, compounded quarterly. The $7,100 plus earned interest must remain in the account 1 years before it can be withdrawn. How much money will be in the account at the end of 1 years? (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Present Value Answer is complete but not entirely correct. Table Factor + Total Accumulation 0 1.0824 . $ 7.685.26% $ 7,100 < Prev 5 of 6 Next >

Answer 1

Effective annual Rate = (1+Periodic rate)^Number of compounding periods - 1

= (1+4%/4)^4 - 1

= 4.060401%

Table factor = (1+Effective annual rate)

= 1.04060401

i.e. 1.0406

Hence, total accumulation = 7100*1.0406 = $7,388.26