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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Transcribed Image Text:Assume you deposit $700 every three months at a 6 percent annual rate, compounded quarterly. How much will
you have at the end of 20 years?
Note: "every three months" is quarterly. It happens 4 times per year.
quarterly
PMT=
Interest
6% (APR)annual compounded quarterly
We need periodic rate (quarterly rate)
periodic rate= APR / m
periodic rate=
We need N in quarters.
N =
Expert Solution
Step 1
Information Provided:
- Quarterly deposit = $700
- Interest rate (APR) = 6% compounded quarterly
- Period = 20 years
- Compounding (m) = 4 (Quarterly)
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