Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 The Masterson family is setting up a vacation fund,and they plan on depositing $1,000 per quarter in an investment that will pay 12% annual interest.What amount will they have available for their vacation at the end of 2 years?
A)$8,000.00
B)$8,960.00
C)$8,892.30
D)$8,240.00
E)$8,487.20

Question

Present Value of 1  Future Value of 1  Present Value of an Annuity of 1  Future Value of an Annuity of 1  The Masterson family is setting up a vacation fund,and they plan on depositing $1,000 per quarter in an investment that will pay 12% annual interest.What amount will they have available for their vacation at the end of 2 years?
A)$8,000.00 
B)$8,960.00 
C)$8,892.30 
D)$8,240.00 
E)$8,487.20

Quizplus · Accepted Answer

We can use the formula for the future value of an annuity:
FV = PMT x ((1 + r)^n - 1) / r
where PMT is the quarterly deposit, r is the quarterly interest rate, and n is the number of quarters (in this case, 8 quarters over 2 years). 
Substituting in the values, we get:
FV = 1000 x ((1 + 0.12/4)^8 - 1) / (0.12/4)
FV = $8,892.30
Therefore, the Masterson family will have $8,892.30 available for their vacation at the end of 2 years. 
So, the correct answer is C.