Question

Matt Johnson delivers newspapers and is putting away​ 35 at the end of each quarter from his paper route collections. Matt is 12 years old and will use the money when he goes to college in 6 years. What will be the value of​ Matt's account in 6 years with his quarterly payments if he is earning 5​% ​(APR), 11% ​(APR), or 14%​(APR)?

Answer 1

Future value at 5% Px[(1+r)^n-12:11 Here, A Interest rate per annum B Number of years C Number of payments per per annum A:C Interest rate per period (r) BxC Number of periods (n) Payment per period (P) 5.0% 6 4 1.25% 24 35 Future value at 5% | $ 972.58 35x((1+1.25%)^24-1)=1.25%

Future value at 11% Px[(1+r)^n-1)=r Here, 11.0% A Interest rate per annum B Number of years c Number of payments per per annum A:C Interest rate per period (r) BⓇC Number of periods (n) Payment per period (P) 2.75% 24 35 Future value at 11% $ 1,167.89 35x((1+2.75%)^24-1)2.75%

Future value at 14% Px[(1+r)^n-1]=r Here, A Interest rate per annum B Number of years CNumber of payments per per annum A:C Interest rate per period (r) BxC Number of periods (n) Payment per period (P) 14.0% 6 | 4 3.50% - 24 35 Future value at 14% $ 1,283.33 35x((1+3.5%)^24-1):3.5%

Please rate thumbs up