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4 April, 19:26

Beverly Hills started a paper route on January 1. Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually. How much will she have after three more years?

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  1. 4 April, 21:45
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    Total amount = $12,558.68

    Explanation:

    Giving the following information:

    Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually.

    First, we need to calculate the total accumulated money after four years with the following formula.

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

    A = deposit = 550

    N = 16

    i=0.08/4 = 0.02

    FV = {550*[ (1.02^16) - 1]}/0.02 = 10,251.61

    Now, we calculate the second investment:

    FV = PV * (1+i) ^n = 10,251.62 * (1.07^3) = $12,558.68
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