Posted by **cant figure this out :(** on Saturday, April 30, 2011 at 7:35pm.

Suppose a young couple deposits $700 at the end of each quarter in an account that earns 7.1%, compounded quarterly, for a period of 6 years. After the 6 years, they start a family and find they can contribute only $200 per quarter. If they leave the money from the first 6 years in the account and continue to contribute $200 at the end of each quarter for the next 18½ years, how much will they have in the account (to help with their child's college expenses)?

- math -
**MathMate**, Sunday, May 1, 2011 at 6:40pm
Part 1:

R=$700 per quarter

i=7.1%/4 per quarter

n=6*4=24 quarters

S=future value

=R((1+i)^n-1)/i

=700((1+.071/4)^24-1)/(.071/4)

=$20,720.40

After 6 years,

S1=future value (after 18.5 years) of initial investment

=S(1+i)^n

=$20720.40(1+.071/4)^74

=$76179.91

R=$200 per quarter

i=7.1%/4 per quarter

n=18.5*4=74 quarters

S2=future value for further contributions

=200((1+.071/4)^74-1)/(.071/4)

=$30,158.48

Total future value

= $76179.91+$30158.48

= $106,338.39

Check the calculations please.

## Answer This Question

## Related Questions

- Math - A person wants to establish an annuity for retirement purposes. He wants ...
- math - A young executive deposits $400 at the end of each month for 7 years and ...
- business - Susie has decided to make deposits at the end of each quarter in the ...
- Financial Math - A young executive deposits $400 at the end of each month for 9...
- finite math - A young executive deposits $400 at the end of each month for 7 ...
- Finance - Bob Bryan made deposits of $10,000 at the end of each quarter to Lion ...
- Math - You plan to make 24 equal quarterly payments (payments are at the end of ...
- Math help - You plan to make 24 equal quarterly payments (payments are at the ...
- Math - The winner of a popular lottery is offered one of two options: i) a lump ...
- Economics - Ben deposits $5000 now into an account that earns 7.5 percent ...

More Related Questions