Anna places $384 each quarter into an account that earns. If the account earns 1.41% interest compounded quarterly. After 7 years, the amount in the account should be? What kind of account is this
Anna places $384 each quarter into an account that earns. If the account earns 1.41% interest compounded quarterly. After 7 years, the amount in the account should be? What kind of account is this
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Anna places $384 each quarter into an account that earns. If the account earns 1.41% interest compounded quarterly. After 7 years, the amount in the account should be? What kind of account is this
Expert Solution
Step 1
Given data;
Quarterly payment = $384
interest rate = 1.41%
number of years = 7
Compounding frequency = 4
Quarterly interest rate = annual interest rate / compounding frequency
= 1.41% /4
= 0.3525%
Number of payments = number of years * compounding frequency
= 7 * 4
= 28
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