Angela decided to save $100 from each paycheck to put toward a car. Twenty-six paychecks, one every other week, are deposited into a money market account with an annual interest rate of 7.5 percent. Determine the future value of the account after 4 years. Submit your answer in exact change.
First, calculate the total amount saved over 4 years:
$100 saved per paycheck x 26 paychecks per year = $2,600 saved per year
$2,600 saved per year x 4 years = $10,400 total saved
Next, determine the future value of the account with interest:
FV = PV * (1 + r/n)^(nt)
FV = $10,400 * (1 + 0.075/1)^(1*4)
FV = $10,400 * (1 + 0.075)^4
FV = $10,400 * (1.075)^4
FV = $10,400 * 1.321806844
FV = $13,759.47
Therefore, the future value of the account after 4 years would be $13,759.47.