Question

Question 12 2,116 14 Maci

Answer 1

The Value at the end of third year = $3,392.28

Year	Cash Flow	Future Value of this cash flow	Cumulative Future Value
1	$1,000	$1,266.77	$1,266.77
2	$1,000	$1,125.51	$2,392.28
3	$1,000	$1,000.00	$3,392.28

Quarterly Interest Rate = 12% / 4 = 3% per quarter

Number of Compounding Period for the first year Deposit = 4 x 2 = 8 Periods

Future Value of this cash flow - Year 1 = $1,000 x (1 + 0.03)⁸

= $1,000 x 1.26677

= $1,266.77

Number of Compounding Period for the second year Deposit = 4 x 1 = 4 Periods

Future Value of this cash flow - Year 1 = $1,000 x (1 + 0.03)⁴

= $1,000 x 1.12551

= $1,125.51

Future Value of third year Deposit = $1,000 x 1 = $1,000