Question

Tammy wishes to purchase a new laptop in 4 years. She makes quarterly deposits of $130 into an account that pays 4% per year compounded quarterly for 4 years. How much will she have towards the purchase of a new laptop in 4 years?

Answer 1

Answer:

FV= $2,243.52

Explanation:

Giving the following information:

Number of periods= 4*4= 16

Quarterly deposit= $130

Interest rate= 4%

First, we need to calculate the quarterly interest rate:

Interest rate= 0.04/4= 0.01

Now, using the following formula, we can calculate the final value:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {130*[(1.01^16) - 1]} / 0.01

FV= $2,243.52