A condominium building needs to save $50,000 in 8 years with a savings account that yields 3.75% interest. What are the required quarterly payments?

A condominium building needs to save $50,000 in 8 years with a savings account that yields 3.75% interest. What are the required quarterly payments?

• A. $873.45
• B. $1,038.40
• C. $1,211.55
• D. $1,347.08

Answer: (D)

To determine the required quarterly payments to accumulate $50,000 in 8 years with an account that yields 3.75% interest, it is important to use the future value of an annuity formula. In this context, the future value of an annuity considers a series of equal payments made at regular intervals, compounded at a specific interest rate. Given that the interest rate is 3.75% annually, when breaking it down into quarterly payments, the effective rate per quarter becomes 3.75% divided by 4, which equals approximately 0.9375%. Over the course of 8 years, with 4 quarters per year, there are a total of 32 quarters. Using the future value of an annuity formula: \[ FV = P \times \frac{(1 + r)^n - 1}{r} \] where: - \(FV\) is the future value ($50,000), - \(P\) is the quarterly payment we want to find, - \(r\) is the interest rate per quarter (0.9375% or 0.009375 as a decimal), - \(n\) is the total number of payments (32 quarters). Re

To determine the required quarterly payments to accumulate $50,000 in 8 years with an account that yields 3.75% interest, it is important to use the future value of an annuity formula. In this context, the future value of an annuity considers a series of equal payments made at regular intervals, compounded at a specific interest rate.

Given that the interest rate is 3.75% annually, when breaking it down into quarterly payments, the effective rate per quarter becomes 3.75% divided by 4, which equals approximately 0.9375%. Over the course of 8 years, with 4 quarters per year, there are a total of 32 quarters.

Using the future value of an annuity formula:

[

FV = P \times \frac{(1 + r)^n - 1}{r}

]

where:

• (FV) is the future value ($50,000),

• (P) is the quarterly payment we want to find,

• (r) is the interest rate per quarter (0.9375% or 0.009375 as a decimal),

• (n) is the total number of payments (32 quarters).

Re