Computing Growth for a Savings Fund with Periodic Deposits (Supplement C)
On January 1. 2011, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in a savings account for you. On the basis of a budget, you estimate that the trip currently would cost $15,000. To be generous, your grandmother decides to deposit $3.500 in the fund at the end of each of the next four years, starting on December 31, 2011. The savings account will earn 6 percent annual interest, which will be added to the savings account at each year-end.
Required (show computations and round to the nearest dollar):
1. How much money will you have for the trip at the end of year 4 (i.e., after four deposits)?
2. What is the interest for the four years?
3. How much interest revenue did the fund earn in 201 1, 2012. 2013. and 2014?
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