document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1141046>Question 1141046</A>: <I><SPAN STYLE=\"word-break: break-all;\"> If an employee deposits Rs. 2,000 at the end of each year into his company’s plan which pays 7% interest compounded quarterly, how much will he have in the account at the end of 5 years?\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #761606 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=761606\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> use the formula f = p * (1 + r) ^ n\r<BR>\n" );
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document.write( "interest rate per time period = 7% per year / 4 = 1.75% per quarter / 100 = .0175 per quarter.\r<BR>\n" );
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document.write( "2000 is deposited at the end of each year.\r<BR>\n" );
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document.write( "future value of 2000 deposited at the end of year 1 = 2000 * (1.0175) ^ 16 = 2639.858702.\r<BR>\n" );
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document.write( "future value of 2000 deposited at the end of year 2 = 2000 * (1.0175) ^ 12 = 2462.87863.\r<BR>\n" );
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document.write( "future value of 2000 deposited at the end of year 3 = 2000 * (1.0175) ^ 8 = 2297.763566.\r<BR>\n" );
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document.write( "future value of 2000 deposited at the end of year 4 = 2000 * (1.0175) ^ 4 = 2143.718063.\r<BR>\n" );
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document.write( "future value of 2000 deposited at the end of year 5 = 2000 * (1.0175) ^ 0 = 2000.\r<BR>\n" );
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document.write( "total future value at the end of year 5 = 11,544.21896.\r<BR>\n" );
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document.write( "this can also be done using a financial calculator to give you future value of payment at the end of each year.\r<BR>\n" );
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document.write( "since the interest rate is compounded, you need to find the effective annual interest rate and use that.\r<BR>\n" );
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document.write( "the effective annual interest rate would be (1 + .0175) ^ 4 = 1.07185903129 - 1 = .071859031 * 100 = 7.185903129%\r<BR>\n" );
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document.write( "using the TI-BA-II financial calculator, i made the following entries.\r<BR>\n" );
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document.write( "present value = 0<BR>\n" );
document.write( "future value = 0<BR>\n" );
document.write( "payment per year = 2000<BR>\n" );
document.write( "effective interest rate per year = 7.185903129%<BR>\n" );
document.write( "payments are made at the end of each year.\r<BR>\n" );
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document.write( "the calculator then computed the future value to be equal to 11,544.21896.\r<BR>\n" );
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document.write( "the results from the manual calculation and the financial calculator calculations both agree.\r<BR>\n" );
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document.write( "when the calculations are done by formula, the interest rate is used.<BR>\n" );
document.write( "the interest rate is the percent interest rate divided by 100.\r<BR>\n" );
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document.write( "when the calculator is used, the percent interest rate is used.<BR>\n" );
document.write( "the percent interest rate is the interest rate multiplied by 100.\r<BR>\n" );
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