You make deposits at the end of every 3-months into a fund earning interest at j₄ = 8%.The first deposit is $500 and each succeeding deposit is 5% less than the preceding deposit.How much have you accumulated at the time of the 20^th deposit?

Question

Quizplus · Accepted Answer

To solve the problem, we can use the formula for the sum of a finite geometric series:

Sn = a(1 - r^n)/(1 - r)

where Sn is the sum of the first n terms, a is the first term, r is the common ratio, and n is the number of terms.

In this case, a = 500, r = 0.95 (since each succeeding deposit is 5% less than the preceding deposit), and n = 20 (since we want to find the sum of the first 20 deposits).

Plugging in these values, we get:

Sn = 500(1 - 0.95^20)/(1 - 0.95)
Sn = $8,053.30

Therefore, the answer is choice C.

You Make Deposits at the End of Every 3-Months into a Fund