Check my work Leslie McCormack is in the spring quarter of her freshman year of
ID: 2543796 • Letter: C
Question
Check my work Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 14%, compounded quarterly EUofSI·PLof$1. EVAotSt. PVAotSLEVADofS1 and PVA0ofSI) (Use appropriate factor(s) from the tables provided.) pd How much will she accumulate in three years by depositing $740 at the end of each of the next 12 quarters, beginning three months from now? (Round your final answers to nearest whole dollar amount.) Table or caloulator function ferences Payment Future ValueExplanation / Answer
Future value of annuity = P [((1 + r)n - 1) / r]
where P = Periodic payment = $740 per quarter
r = rate per period = 14% p.a = 14 / 4 = 3.5% per quarter = 0.035
n = number of periods = 3 years = 3 * 4 = 12 quarters
So, Future value of annuity = 740 [((1 + 0.035)12 -1) / 0.035]
= 740 [((1.035)12 - 1) / 0.035]
= 740 [(1.5110686573 - 1) / 0.035]
= 740 [0.5110686573 / 0.035]
= 740 * 14.6019616371
= $10,805.45 Ans.