SOLUTION: 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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Question 1170477: 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?

Answer by ikleyn(52776)   (Show Source): You can put this solution on YOUR website!
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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?
~~~~~~~~~~~~~~~~~~~~~~~

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.



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