A company deposits $5000 at the end of every month into a fund that pays j₄ = 18%.What is the equivalent quarterly deposit,made at the end of every 3-month period,if the fund credits simple interest for the fractional part of an interest period?

Question

Quizplus · Accepted Answer

First, we need to find the monthly interest rate:

18% / 12 = 1.5%

Next, we need to find the total amount accumulated after 3 months with the $5000 monthly deposits:

Total = (5000 x 3) + (5000 x 2 x 1.5%) + (5000 x 1 x 0.5%)

Total = $15,225

Therefore, the equivalent quarterly deposit would be $15,225 / 3 = $5075.

So, the correct answer is B.

A Company Deposits $5000 at the End of Every Month