To purchase a specialty guitar for his band, for the last three years JJ Morrison has made payments of $111 at the end of each month into a savings account earning interest at 5

Finance Nov 27, 2020

To purchase a specialty guitar for his band, for the last three years JJ Morrison has made payments of $111 at the end of each month into a savings account earning interest at 5.41% compounded monthly. If he leaves the accumulated money in the savings account for another four years at 6.54% compounded quarterly, how much will he have saved to buy the guitar? The balance in the account will be $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Expert Solution

Current value for saved last three years = pmt*((1+r)^n-1))/r

= 111*(((1.004508^36)-1)/0.004508

= 4327.967181

Value after 4 years = (4327.967181*1.01635^16)

= 5610

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