Answer to Question #320271 in Financial Math for Busi

Question

To save money for a new house, you want to begin contributing money to a savings account. Your plan

is to make equal contributions to the account for eight years. Each contribution will be R18 490,00. The

contributions will come at the end of every three month period, starting three months from now. The savings

account pays 9% interest per annum, compounded quarterly. How much money do you expect to have in

the account at the end of the eight years

Answer 1

$FV=pmt[\frac{(1+\frac{r}{m})^{nm}-1}{(\frac{r}{m})}]$

Pmt =R18490

R=9%

N=8 years

M=4

$FV_8=R18490[\frac{(1+\frac{9\%}{4})^{8×4}-1}{(\frac{9\%}{4})}]$

$FV_8=R853090$

The amount in the account tat the end of eight (8) years is R853090