You make payments of 1200 into an account , at the end of every two months for five years. what is the value of these payments if interest is compounded quarterly at 15% p.a.
To find the value of these payments with quarterly compounding, we can use the formula for the future value of an ordinary annuity:
FV = P * ((1 + r/n)^(nt) - 1) / (r/n)
Where:
FV is the future value of the payments
P is the payment amount
r is the interest rate per period (in this case, 15% per year)
n is the number of compounding periods per year (in this case, 4 for quarterly compounding)
t is the number of years
In this case, P = $1200, r = 15% = 0.15, n = 4, and t = 5.
Substituting the values into the formula, we get:
FV = 1200 * ((1 + 0.15/4)^(4*5) - 1) / (0.15/4)
Calculating this expression, the value of these payments is approximately $12,513.29.