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?
A)$7,096.
B)$7,013.
C)$7,129.
D)$8,880.FVA = $500 x 14.1920* = $7,096 *FVA of $1: n=12; i=3%

Question

Quizplus · Accepted Answer

The future value of an annuity formula is used here: FVA = Pmt * [(1 + r)^nt - 1] / r. Patti deposits $500 quarterly, the interest rate per quarter is 3% (12% annually), and there are 12 quarters in 3 years. Using the future value annuity factor (14.1920) for these parameters, the calculation is $500 * 14.1920 = $7,096.

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