Beverly Hills started a paper route on January 1. Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually. How much will she have after three more years?

Question

Business

Lauren Mack

8 November, 17:56

Beverly Hills started a paper route on January 1. Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually. How much will she have after three more years?

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Answers (1)

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Erik Palmer · Answer 1

Total amount = $12,558.68

Explanation:

Giving the following information:

Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually.

First, we need to calculate the total accumulated money after four years with the following formula.

FV = {A*[ (1+i) ^n-1]}/i

A = deposit = 550

N = 16

i=0.08/4 = 0.02

FV = {550*[ (1.02^16) - 1]}/0.02 = 10,251.61

Now, we calculate the second investment:

FV = PV * (1+i) ^n = 10,251.62 * (1.07^3) = $12,558.68