5. Assume tha per t you are investing $3,000 in a savings plan today and will ma

Question

5. Assume tha per t you are investing $3,000 in a savings plan today and will make additional contributions quarter. The plan pays 3% interest per year compounded quarterly at the beginning of of $300 each period instead of the end of each period. a. What is the interest rate per period? Round to 4 decimal places. (2 Points) b. What is the total number of payments? (2 Points) c. Write an Excel formula to determine how much your savings will be worth in 5 years. (4 Points) d. What is the output of this function? If the output is negative, include that as well. (2 Points)

Explanation / Answer

a)

Per period rate = annual rate / number of periods

                      = 3%/4 = 0.75%

b)

number of payments = 4 (12 months / 3 months) in a year

c)

Fv = FV(0.75%,5*4,-300,-3000,0)

d)

output = 9930.92

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