SOLUTION: Find the present value and future value of quarterly payments of 5,000 pesos for 10 years with an interest rate of 2% compounded annually.

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Question 1188537: Find the present value and future value of quarterly payments of 5,000 pesos for 10 years with an interest rate of 2% compounded annually.
Found 2 solutions by Shin123, ikleyn:
Answer by Shin123(626) About Me  (Show Source):
You can put this solution on YOUR website!
Solved by pluggable solver: Finance: Calculate the Future Value of Money
If P is the principal. r the interest rate in decimal, n the number of times it is compounded per year, and y the number of years that the money is kept, the future value is P%2A%281%2Br%2Fn%29%5E%28y%2An%29. Plugging in the numbers, we get 5000%2A%281%2B0.02%2F1%29%5E%2810%2A1%29. Simplifying, we get ,which can be rounded to highlight%28highlight_green%28highlight%286094.97%29%29%29 dollars.

The future value of 5,000 pesos in ten years is highlight%286094.97%29 pesos.

Answer by ikleyn(52781) About Me  (Show Source):
You can put this solution on YOUR website!
.
Find the present value and future value of quarterly payments of 5,000 pesos for 10 years
with an interest rate of 2% compounded annually.
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            Your post/problem seems to be strange to me,  since it tells about quarterly payments that are compound annually.

            But if it is so,  then the calculations of tutor  @Shin123 are  IRRELEVANT.


If it is so,  then we have,  actually,  a classic Annuty Due account with the annual payment
of 5000*4 = 20000 pesos compounded 2% yearly. 

If it is so, then the future value after 10 years is


    FV = 20000%2A%28%28%281%2B0.02%29%5E10-1%29%2F0.02%29 = 218994.42  pesos.    ANSWER

Solved (correctly).

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On Ordinary Annuity saving plans,  see the lessons
    - Ordinary Annuity saving plans and geometric progressions
    - Solved problems on Ordinary Annuity saving plans
in this site.

The lessons contain  EVERYTHING  you need to know about this subject,  in clear and compact form.

When you learn from these lessons,  you will be able to do similar calculations in semi-automatic mode.


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This case shows that it is not sufficient to have solvers for each problem -

in addition,  a user should use the solvers in a proper way  ( ! )