document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1141228>Question 1141228</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? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #762253 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=762253\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> 2000 is deposited at the end of each year.<BR>\n" );
document.write( "plan pays 7% compounded quarterly.<BR>\n" );
document.write( "how much in the account at the end of 5 year.\r<BR>\n" );
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document.write( "7% per year is the nominal annual interest rate.\r<BR>\n" );
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document.write( "to find the effective annual interest rate, do the following:\r<BR>\n" );
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document.write( "7% per year / 4 equals 1.75% per quarter.\r<BR>\n" );
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document.write( "divide that by 100 and add 1 to it and then take it to the fourth exponent to get:\r<BR>\n" );
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document.write( "1.75 / 100 = .0175 + 1 = 1.0175 ^ 4 =  1.071859031.\r<BR>\n" );
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document.write( "subtract 1 from that and multiply it by 100 to get 7.1859031%.\r<BR>\n" );
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document.write( "that's the effective annual interest rate.\r<BR>\n" );
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document.write( "stick that in your financial calculator.<BR>\n" );
document.write( "set the number of time periods equal to 5 years.<BR>\n" );
document.write( "set present value and future value to 0.<BR>\n" );
document.write( "set yearly payment to -1000 (negative because money going out).<BR>\n" );
document.write( "set yearly payments to end of each year.<BR>\n" );
document.write( "tell the calculator to give you future value.<BR>\n" );
document.write( "you will get 5772.10948 without rounding.<BR>\n" );
document.write( "it will become 5772.11 with rounding to the nearest penny.\r<BR>\n" );
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document.write( "here's a display of the results using a financial calclator.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/053001.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "the one i used online is at <a  rel=nofollow HREF= \"https://arachnoid.com/finance/\" target = \"_blank\">https://arachnoid.com/finance/</a>\r<BR>\n" );
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document.write( "the more detailed one that i use off line is the TI-BA-II (Texas Instruments Business Analyst II).<BR>\n" );
document.write( "it give you more decimal places in the result than the online one.\r<BR>\n" );
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document.write( "if you were to use cash flow analysis, you would get the same result as shown below:\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/053002.jpg\" alt=\"$$$\" >\r<BR>\n" );
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document.write( "on the right i used the net present value function to get the present value of the cash flows for 5 years.\r<BR>\n" );
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document.write( "i then used the future value function to get the future value of the present value for same 5 years.\r<BR>\n" );
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document.write( "on the left i created cash flows at the end of each 4 quarters of a year.\r<BR>\n" );
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document.write( "this simulated the payment of 1000 at the end of each of the 5 years.\r<BR>\n" );
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document.write( "there were 20 quarters in all.\r<BR>\n" );
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document.write( "i used the quarterly interest rate of 7 / 100 = .07 / 4 = .0175.\r<BR>\n" );
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document.write( "the three columns are the cash flows, the present value of the cash flows, and the future value of the cash flows.\r<BR>\n" );
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document.write( "both methods gave the same results, as they should have.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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