At the end of each quarter,Patti deposits $500 into an account that pays 12% interest compounded quarterly.How much will Patti have in the account in three years?
A)$7,096.
B)$7,013.
C)$7,129.
D)$8,880.

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of an annuity is calculated using the formula FV = P * ((1 + r/n)^(n*t) - 1) / (r/n), where P is the periodic payment, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. In this case, P = $500, r = 12%, n = 4 (since the interest is compounded quarterly), and t = 3. Plugging these values into the formula, we get FV = $500 * ((1 + 0.12/4)^(4*3) - 1) / (0.12/4) = $7,096.

At the End of Each Quarter,Patti Deposits $500 into an Account