Gina has planned to start her college education four years from now. To pay for her college education, she has decided to save $1,000 a quarter for the next four years in a bank account paying12 percent compounded quarterly. How much will she have at the end of the fourth year?

Question

Quizplus · Accepted Answer

To calculate the future value of Gina's savings after four years, we can use the formula:

FV = PV (1 + r/n)^(nt)

where:

PV = present value (the amount she is saving each quarter, which is $1,000)
r = annual interest rate (12%)
n = number of times the interest is compounded per year (4 quarters)
t = number of years (4 years)

Plugging in the values, we get:

FV = 1000 (1 + 0.12/4)^(4*4)
FV = 1000 (1 + 0.03)^16
FV = 1000 (1.03)^16
FV = 1000 (1.629) 
FV = $1,628.79 (rounded to the nearest cent)

Therefore, at the end of four years, Gina will have saved $1,628.79 per quarter for a total savings of:
4 years * 4 quarters/year * $1,628.79/quarter = $65,151.60

Therefore, the best choice is C, $20,157.

Gina Has Planned to Start Her College Education Four Years