Harry Morgan plans to make 30 quarterly deposits of $200 into a savings account. The first deposit will be made immediately. The savings account pays interest at an annual rate of 8%, compounded quarterly. How much will Harry have accumulated in the savings account at the end of the seven and a half-year period? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor (s) from the tables provided.)

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Business

Sierra Wiggins

3 May, 20:26

Harry Morgan plans to make 30 quarterly deposits of $200 into a savings account. The first deposit will be made immediately. The savings account pays interest at an annual rate of 8%, compounded quarterly. How much will Harry have accumulated in the savings account at the end of the seven and a half-year period? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor (s) from the tables provided.)

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Cruz Fletcher · Answer 1

Amount in savings account after 7 and a half years is $8,113.62

Explanation:

Given:

Quarterly payments made in savings account (pmt) = $200

Annual interest rate = 8%

Quarter interest rate (rate) = 8:4 = 2%

Compounding period (nper) = 7 and a half years or 7.5*4 = 30 quarterly payments

This is an annuity as uniform amount of $200 is deposited every quarter.

Savings at the end of seven and a half years mean future value of annuity.

Future value of annuity can be computed using spreadsheet function = FV (rate, nper, pmt, PV)

Savings account will have $8113.62 at the end of seven and a half years.