CP will need save some money to open a new branch of convenient store in 6 years. A special account, which yields 3% compounded quarterly, is prepared for CP to set aside $29000 at the end of every 3-month period, to accumulate the money.
How much money will CP have after 6 years?

To solve this, we will use the **Future Value of an Annuity formula** since CP is making regular quarterly deposits into an account with interest compounded quarterly.

The formula for the future value $FV$ of an ordinary annuity (where payments are made at the end of each period) is given by:

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

Where:
- $ P $ is the payment made at the end of each period (in this case, $29,000).
- $ r $ is the interest rate per period.
- $ n $ is the total number of periods.

### Given:
- Quarterly payment $ P = 29,000 $
- Annual interest rate = 3%, so the quarterly interest rate $ r = \frac{3\%}{4} = 0.0075 $
- Time period = 6 years, so the number of quarters $ n = 6 \times 4 = 24 $ periods.

Now, substituting these values into the formula:

\[
FV = 29,000 \times \left[ \frac{(1 + 0.0075)^{24} - 1}{0.0075} \right]
\]

Let's calculate this value.The total amount CP will have after 6 years is approximately **$759,465.65**.

Would you like further details or have any questions about this calculation?

Here are 5 related questions to expand on this concept:
1. What would happen if the interest rate increased to 4% annually?
2. How would the future value change if the payments were made monthly instead of quarterly?
3. What is the impact of compounding frequency on the final amount?
4. How much interest will CP earn by the end of 6 years?
5. What would happen if CP missed one or more payments?

**Tip:** The more frequent the compounding, the greater the effect of interest accumulation over time.

CP will need save some money to open a new branch of convenient store in 6 years. A special account, which yields 3% compounded quarterly, is prepared for CP to set aside $29000 at the end of every 3-month period, to accumulate the money. How much money will CP have after 6 years?

Learn how to calculate the future value of an ordinary annuity where $29,000 is deposited quarterly for 6 years at an interest rate of 3% compounded quarterly. Explore the step-by-step calculation and key financial concepts such as compound interest and time value of money.

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