You just deposited $8,000 in a bank account that pays a 4.0% nominal interest rate, compounded...
You just deposited $8,000 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly. If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now?
| a. |
$20,232.41 |
|
| b. |
$23,789.75 |
|
| c. |
$19,565.40 |
|
| d. |
$26,457.76 |
|
| e. |
$22,233.41 |
Homework Answers
rate positively ..
| Period | Cash flow | future value | |||
| 0 | 8000 | 9,014.60 | 8000*(1+1%)^12 | ||
| 1 | 0 | - | 0 | ||
| 2 | 0 | - | 0 | ||
| 3 | 0 | - | 0 | ||
| 4 | 5000 | 5,414.28 | 8000*(1+1%)^8 | ||
| 5 | 0 | - | 0 | ||
| 6 | 0 | - | 0 | ||
| 7 | 0 | - | 0 | ||
| 8 | 7500 | 7,804.53 | 7500*(1+1%)^4 | ||
| 9 | 0 | - | 0 | ||
| 10 | 0 | - | 0 | ||
| 11 | 0 | - | 0 | ||
| 12 | 0 | - | 0 | ||
| Total | Total | 22,233.41 | |||
| Therefore answer is option e = | 22,233.41 | ||||
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