Billy deposits $800 at the end of every 3-months in a fund earning interest at j4 = 12%.At the end of 3 years,the interest rate changes to j4 = 8%.What is the accumulated value immediately after his 20th deposit?
A)$18,220.00
B)$20,168.95
C)$21,248.81
D)$21,496.30

Question

Quizplus · Accepted Answer

The correct answer is B because the accumulated value immediately after his 20th deposit is $20,168.95. This can be calculated using the formula for the future value of an annuity, which is:FV = PMT * (((1 + r)^n - 1) / r)where:PMT is the amount of each depositr is the interest rate per periodn is the number of periodsIn this case, PMT = $800, r = 12% / 4 = 3%, and n = 20. Plugging these values into the formula, we get:FV = $800 * (((1 + 0.03)^20 - 1) / 0.03) = $20,168.95

Billy Deposits $800 at the End of Every 3-Months in a Fund