Problema Solution
Find the compound amount for $50,000 at 12% compounded quarterly for 5 years.
Answer provided by our tutors
P = $50,000 million the principal
r = 0.12 or 12% annual rate
m = 4 compounding period per year (compounded quarterly)
i = 0.12/4 = 0.03 interest rate per period
t = 5 years is the time in years
n = t*m = 5*4 = 20 is the total number of compounding periods
A = the future value
The formula for the future value is:
A = P(1 + i)^n
A = 50000(1 + 0.03)^20
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A = $90,305.56
At the end of 5 years the compound amount will be $90,305.56.