Question

If $360 dollars is invested at an interest rate of 4% per year and is compounded quarterly, how much will the investment be worth in 18 years

Answer 1

Fv=360(1+0.04/4)^4*18
Fv=360(1+0.01)^72
Fv=736.96

Answer 2

Principal (P)= $ 360

Rate of Interest = 4 %

Time =18 years

Interest is Compounded Quarterly.

In a year there are 4 Quarters.So, Time =72 Quarters

New Rate of Interest

`=(4)/(4)\\\\=1 \text{percent}`%

Amount after 18 years

`=P * [1+(R)/(100)]^n\\\\=360 * [1+(1)/(100)]^(72)\\\\=360 * (1.01)^(72)\\\\=360 * 2.0470\\\\=736.955`

=$ 737.96