Question

Angela decided to save $100 from each paycheck to buy a car. 26 paychecks, one every other week, and deposited into a money market account with an annual interest rate of 7.5 percent. determine the future value of the account after 4 years. submit your answer in exact change

Answer 1

Let r = 0.075, m = 26 (pay periods per year), PMT = $100, t = 4 years. Number of deposits n = m t = 104 and periodic rate i = r/m.

Future value:
FV = 100 * [ (1 + 0.075/26)^{104} - 1 ] / (0.075/26)

Numerically,
FV ≈ $12,108.23

(Answer given to the nearest cent: $12,108.23.)