Question

OFFERING 12 PTS PLEASE HELP!!

after 3 years what is the total amount of an investment of $2500 in an account paying 2.5% interest, compounded quarterly?

$3362.22
$2611.45
$2694.08
$2971.71

Answer 1

$2,694.08

Explanation:

PV = present value

FV = future value (maturity value)

Yrs = number of years

P/Y = number payment per year

APR = annual percentage rate

i = interest rate in percent per period = APR / (P/Y)

N = number of periods = Yrs * (P/Y)

PV = $2,500.00

Yrs = 3

P/Y = 4

APR = 0.025

Pmt = $.00

i = 0.025 / 4 = 0.00625

N = number of periods = Yrs * (P/Y) = 3*4 = 12

(1 + i)^N = 1.07763259885603

FV = PV (1 + i)^N - Pmt (( 1+i)^N-1)/ i

FV = 2500*1.07763259885603 - * ( 1.07763259885603-1)/ 0.00625

FV = $2,694.08