Question

Determine the amount of money in a savings account at the end of 7 years, given an initial deposit of $13,500 and a 4% annual interest rate when interest is compounded: Use Appendix A for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

A. Annually: ?

B. Semiannually: ?

C. Quarterly: ?

Answer 1

Fy= Py Future Value Present value interest rate no.of years No.of Compoundings n m a Annually Future Value= PV*(1+i/m)^(n*m) 13500*(1+0.04/1)^(7*1) $ 17,765.08 b Semi Annually Future Value= PV*(1+i/m)^(n*m) 13500*(1+0.04/2)^(7*2) $ 17,812.96 с Quarterly Future Value= PV*(1+i/m)^(n*m) 13500*(1+0.04/4)^(7*4) $ 17,837.43