Question

You open a savings account on January 1, 2008 with $1,000. The interest rate stated on this account is 4%, compounded quarterly.

What will your savings account be worth on December 31, 2012 assuming you made no deposits to or withdrawals from the account? Question 8 options:

$1,220.19
$1,216.67
$1,240.41
$1,200.90

Answer 1

FV= $1,220.19

Step-by-step explanation:

Giving the following information:

You open a savings account on January 1, 2008 with $1,000. The interest rate stated on this account is 4%, compounded quarterly.

Effective rate= 4/4= 1%

We need to use the following formula:

FV= PV*(1+i)^n

n= 4*5= 20

FV= 1000*(1.01^20)= $1,220.19