You receive a regular quarterly bonus of $800 at work, and deposit it in a bank account with interest of 12%, compounded monthly. How much money will you have in your bank account after 3 years?

$11,372.99

Explanation:

Since in the question, he interest is compounded monthly while the payments are made on quarterly basis. To balance these two first we find out the EAR which is shown below:

The EAR is

= (1 + APR ÷ number of years)^number of years - 1

= (1 + 12% ÷ 12)^12 - 1

= 12.68%

Now in quarterly it is

= {(1 + EAR)^(1 ÷ 4) - 1} × 4

= {(1 + 12.68% ÷ 4)^(1 ÷4) - 1} × 4

= 12.12%

Now we use the future value formula that is shown in the attachment

Present value = $0

Rate of interest = 12.12%  ÷ 4 = 3.03%

NPER = 3 years × 4 quarters = 12

PMT = $800

The formula is shown below:

= -FV(Rate;NPER;PMT;PV;type)

So, after solving this, the future value is $11,372.99

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