ryansanchez665 ryansanchez665
  • 02-12-2017
  • Mathematics
contestada

Your 6 1/4 year investment of $40,000 at 14% compounded quarterly is worth how much now?

Respuesta :

meerkat18
meerkat18 meerkat18
  • 12-12-2017
The formula to be used here is:

F = P(1+i)ⁿ
where 
P = 40000
n = 6 1/4 years

Let's find i first which has to be converted to compounded annually.

i = (1 + r/m)^m - 1
where m = 4 because there are 4 quarters in 1 yr; and r is the given 0.14.
i = (1 + 0.14/4)⁴ - 1 = 0.1475

Thus,
F = (40000)(1+0.1475)^(6 1/4)
F = $94,517.96
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