Problema Solution
How do we find the future value of 1000 after compounding at 3% annually for ten years, compounding quarterly?
Answer provided by our tutors
A = ? the future value
P = $1,000 is the principal
t = 10 years
r = 0.03 or 3% the annual interest rate
m = 4 is the number of compounding periods per year
n = m*t = 4*10 = 40 is the number of compounding periods
i = r/m = 0.03/4 is the interest rate per period
A = P(1 + i)^n
A = 1000(1 + 0.03/4)^40
A = $1348.347 is the future value
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