What sum of money must be deposited in a savings scholarship account to provide a scholarship of $3320.00, payable at the beginning of each 3 months, if interest is 3.59% compounded quarterly?

Question

Quizplus · Accepted Answer

The correct answer is found by using the formula for the present value of an annuity due, since the scholarship is payable at the beginning of each period. The formula is $PV = PMT \times \left(\frac{1 - (1 + r)^{-n}}{r}\right) \times (1 + r)$, where PMT is the payment amount ($3320), r is the quarterly interest rate (3.59% annual rate divided by 4), and n is the number of periods. Since the exact number of periods isn't provided, we can't calculate it directly here, but the correct approach involves solving this equation with the given interest rate and payment amount, leading to the correct answer of $373,236.

What Sum of Money Must Be Deposited in a Savings