Question

Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslle would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly (FV of $1. PV of $1. FVA of $1. PVA SI EVAD of $1 and PVAD OF $ (Use appropriate factor(s) from the tables provided.) How much will Leslie accumulate in three years by depositing $400 at the beginning of each of the next 12 quarters? (Round your Interest rate to 1 decimal place.) Answer is complete but not entirely correct. Table or calculator function FVAD of $1 Payment 400 5216

Answer 1

Future value: FVAD of $1 1 Table or calculator function 2 Payment $400 n= 1.5% $5,295 5 Future value The only mistake in your solution is that you have applied future value formula as if the payments are made at the end of the period. But the payments are made at the beginning of the period, so the respective formula will be applied. Calculations are shown below: FVAD of $1 1 Table or calculator function 2 Payment 400 n = 12 i = 1=6%/4 =FV(B4,B3,-B2,0,1) Future value