Problema Solution
Finance: suppose $4000.00 is invested at 4% compounded quarterly. How much money will be in the account A). 3/4 year? B). 15 years?
Answer provided by our tutors
P = $4,000.00 the principal
r = 0.04 or 4% annual rate
m = 4 compounding period per year (compounded quarterly)
i = 0.04/4 = 0.01 interest rate per period
t = number of years
n = t*m = 4t total number of compounding periods
A = the future value
A = P(1 + i)^n
A). 3/4 year?
t = 3/4 years
n = 4*(3/4) = 3
A = 4000(1 + 0.01)^3
A = $4,121.20
click here to see the step by step calculation:
there will be $4,121.20 on the account.
B). 15 years
t = 15 years
n = 4*15
n = 60
A = 4000(1 + 0.01)^60
A = $7,266.79
click here to see the step by step calculation:
there will be $7,266.79 on the account.