If a single payment of $4,500 at time 0 and $240 per quarter deposits in years 2 through 6( a total of 17 deposits) are deposited at an interest rate of 6% per quarter, compounded quarterly, the money in the savings account at the end of year 6 would be closest to: Select one: a

Economics Dec 15, 2020

If a single payment of $4,500 at time 0 and $240 per quarter deposits in years 2 through 6( a total of 17 deposits) are deposited at an interest rate of 6% per quarter, compounded quarterly, the money in the savings account at the end of year 6 would be closest to: Select one: a. $30,665 b. $24,991 C. $31, 151 d. $12, 159

Expert Solution

We can solve it like this. B is the right answer.

Quarter	Deposit	Future value = Deposit*(1+6%)^(24-Quarter)
0	4,500.00	18,220.21
1		-
2		-
3		-
4		-
5		-
6		-
7		-
8	240.00	609.68
9	240.00	575.17
10	240.00	542.62
11	240.00	511.90
12	240.00	482.93
13	240.00	455.59
14	240.00	429.80
15	240.00	405.47
16	240.00	382.52
17	240.00	360.87
18	240.00	340.44
19	240.00	321.17
20	240.00	302.99
21	240.00	285.84
22	240.00	269.66
23	240.00	254.40
24		-
	Total	24,751.30

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