At the end of each quarter,Patti deposits $500 into an account that pays 12% interest compounded quarterly.How much will Patti have in the account in three years?

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of an annuity is given by the formula FV = P * ((1 + r/n)^(n*t) - 1) / (r/n), where P is the payment, r is the interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, P = $500, r = 12%, n = 4, and t = 3. Plugging these values into the formula, we get FV = $500 * ((1 + 0.12/4)^(4*3) - 1) / (0.12/4) = $7,096.

At the End of Each Quarter,Patti Deposits $500 into an Account