Question

How much should you deposit into a bank account annually in order to buy a property that you expect to cost $231400 in 4 years if the account pays 3% annual interest? You are able to deposit $1355 quarterly into a bank account that is paying 14% annually. How much will you be able to accumulate after 8 years? (Express your answer as a positive number and to two decimal places.)

Answer 1

1)	Annual deposit	=	Future value of annual deposit	/	Future value of annuity of 1
		=	$       2,31,400	/	4.183627
		=	$     55,310.86
	Working:
	Future value of annuity of 1	=	(((1+i)^n)-1)/i		Where,
		=	(((1+0.03)^4)-1)/0.03		i	=	3%
		=	4.183627		n	=	4
2)	Accumulated value after 8 years	=	Quarterly deposit	*	Future value of annuity of 1
		=	$             1,355	*	57.3345
		=	$     77,688.25
	Working:
	Future value of annuity of 1	=	(((1+i)^n)-1)/i		Where,
		=	(((1+0.035)^32)-1)/0.035		i	=	14%/4	=	0.035
		=	57.33450247		n	=	8*4	=	32