Problema Solution

How much money will you have in 9 years if you invest $5,000 at a 4.1% annual rate of interest compounded quarterly? How much will you have if it is compounded monthly?

Answer provided by our tutors

FV= (money put in at start)*(1+rate of interest/(compounding times(a.k.a. n))^(time in years*n)

FV= P0*(1+r/n)^(t*n)

quarterly is 4 times (n=4)

FV=$5,000*(1+.041/4)^(9*4)=$7,217.87

monthly is 12 times (n=12)

FV=$5,000*(1+.041/12)^(9*12)=$7,226.89