Carlos deposits $350 at the end of each month to save for his retirement. His money...

Carlos deposits $350 at the end of each month to save for his retirement. His money earns 4.2% compounded quarterly. How much money will Carlos have in 10 years' time?

Select one:

a. $14 995.63

b. $18 258.97

c. $52 044.36

d. $52 084.59

Solutions

Expert Solution

Particulars	Amount
Given APR	4.20%
Given compounding frequency per year	4
Effective annual rate	4.267%
(1+ 0.042/4)^4 -1
Required compounding frequency per year	12
Monthly effective rate	0.3488%
(1+ 0.0426661426550625)^1/12 -1
Required APR	4.185%
0.003488*12

FV of annuity	=	P * [ (1+r)^{^n} -1 ]/ r

Periodic payment	P=	$ 350.00

rate of interest per period	r=
Rate of interest per year		4.1854%

Payment frequency		Once in 1 months
Number of payments in a year		12.00
rate of interest per period		0.0418539*1/12	0.3488%

Number of periods
Number of years		10
Number of payments in a year		12
Total number of periods	n=	120

FV of annuity	=	350* [ (1+0.00349)^120 -1]/0.00349

FV of annuity	=	52,044.37

Answer is:

52,044.36

please rate.

ekkarill92 answered 1 year ago

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