Suppose that today (January 1) you deposited $1,000 into a savings account that pays 8 percent. a.

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Question:

Suppose that today (January 1) you deposited $1,000 into a savings account that pays 8 percent.

a. If the bank compounds interest annually, how much will you have in your account three years from today?

b. What would your balance be in three years if the bank used quarterly compounding rather than annual compounding?

c. Suppose you deposited the $1,000 in four payments of $250 each on January 1 of the next four years, beginning one year from today. How much would you have in your account in four years when the last deposit is made assuming that interest is 8 percent compounded annually?