Midtown Trust is paying 6% interest compounded quarterly. What is the future value of $2,000 deposited at the end of every three month period for 6 years?
2000(1+.015)^24/.015=
57267.04
To find the future value of the deposited amount, we can use the compound interest formula:
Future Value = Principal * (1 + (Interest Rate / Compounding Frequency)) ^ (Compounding Frequency * Number of Years)
In this case, the principal amount is $2,000, the interest rate is 6% (or 0.06), and it is compounded quarterly, meaning there are 4 compounding periods in a year. The number of years is 6.
Plugging in the values, we get:
Future Value = $2,000 * (1 + (0.06 / 4)) ^ (4 * 6)
Now, let's calculate step-by-step:
Step 1: Calculate the interest rate per compounding period:
Interest Rate per Compounding Period = 0.06 / 4 = 0.015
Step 2: Calculate the total number of compounding periods:
Total Number of Compounding Periods = 4 * 6 = 24
Step 3: Calculate the future value:
Future Value = $2,000 * (1 + 0.015) ^ 24
Calculating further:
Future Value = $2,000 * 1.015 ^ 24
Using a calculator or a spreadsheet, we find:
Future Value ≈ $2,000 * 1.462166 ≈ $2,924.33
Therefore, the future value of $2,000 deposited at the end of every three-month period for 6 years is approximately $2,924.33.
i = .06/4 = .015
n = 4(6) = 24
What is the "future" value ....
So which formula do you think you should use ?
What is your equation?
Let me know what you got.
im not sure that is why i posted, our teacher gave us the assigment and told us to use the formulas and not the table in the book, but the book only gives me the formula with the table answers, not how to figure out how they got the number on the table
not sure if it is an annuity due or ordinary annuity
if it is ordanary the formula would be FV=Pmt*(1+i)^n-1/i,,correct?
if it is annuity due
FV=Pmt*(1+i)^n-1/i*(1+i)