If Gerry makes a deposit of $1,500 at the end of each quarter for 5 years, how much will he have at the end of the 5 years assuming a 12% annual return and quarterly compounding?
A) $40,305
B) $30,000
C) $108,078
D) $161,220

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of an annuity is calculated using the formula: FV = P * ((1 + r/n)^(n*t) - 1) / (r/n), where P is the periodic payment, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. In this case, P = $1,500, r = 12%, n = 4 (since the interest is compounded quarterly), and t = 5. Plugging these values into the formula, we get FV = $40,305.

If Gerry Makes a Deposit of $1,500 at the End