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24 January, 18:48

If Gerry makes a deposit of $1,500 at the end of each quarter for five years, how much will he have at the end of the five years assuming a 12% annual return and quarterly compounding?

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  1. 24 January, 19:04
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    The Final Value is $40,305.56

    Explanation:

    Giving the following information:

    Gerry deposits $1,500 at the end of each quarter for five years.

    Interest rate = 12% quarterly compounding

    To calculate the final value, we need to use the following formula:

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

    A = quarterly deposit = 1,500

    i = 0.12/4 = 0.03

    n = 5*4 = 20

    FV = {1,500*[ (1.03^20) - 1]} / 0.03

    FV = $40,305.56
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