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A retirement fund earns 8% compounded quarterly. If Php 400 is deposited every three months
for 25 years, the amount in the fund at the end of 25 years is nearest to?
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Use the formula for the Future value (FV) of an Ordinary Annuity saving plan
FV = , (1)
P is the quarterly payment (deposit);
r is the quarterly effective rate of compounding, presented as a decimal;
n is the number of deposits (= the number of years multiplied by 4, in this case).
Under the given conditions, P = 400; r = 0.08/4 = 0.02; n = 4*25 = 100.
So, according to the formula (1), the fund will get at the end of the 25-th year
FV = = $124,892.92. ANSWER
Solved.