Kristina started setting aside funds 3 years ago to save for a down payment on a house. She has saved $900 each quarter and earned an average rate of return of 4.8 percent. How much money does she currently have saved for her down payment?

Question

Quizplus · Accepted Answer

The correct answer is A.The amount of money Kristina has saved can be calculated using the formula for the future value of an annuity:FV = P * ((1 + r/n)^(n*t) - 1) / (r/n)where:P is the amount of money saved each quarter ($900)r is the annual rate of return (4.8%)n is the number of times per year that the money is saved (4)t is the number of years that the money has been saved (3)Plugging in the values, we get:FV = 900 * ((1 + 0.048/4)^(4*3) - 1) / (0.048/4)= 900 * ((1.012)^12 - 1) / 0.012= 900 * (1.154210 - 1) / 0.012= 900 * 0.154210 / 0.012= 11,542.10Therefore, Kristina currently has $11,542.10 saved for her down payment.

Kristina Started Setting Aside Funds 3 Years Ago to Save