Question

An investment of $7,650 earns interest at the rate of 5% and is compounded quarterly. What is the accumulated value of the investment at the end of 9 years?

a.
$11,964.17
b.
$11,867.66
c.
$9,338.56
d.
$8,554.94

Answer 1

`A = P * ( 1 + r ) ^(t) \\ A = 7,650 * ( 1 + (0.05)/(4y)) ^(9*4)= \\ =7,650 * 1.0125 ^(36)= \\ 7,650 * 1.56394 =11,964.17`
Answer:
A ) $11,964.17

Answer 2

FV = P(1 + r/t)^nt; where P is the initial investment, r is the rate, t is the number of accumulation in a year, n is the number of years.

FV = 7650(1 + 0.05/4)^(9 x 4) = 7650(1 + 0.0125)^36 = 7650(1.0125)^36 = 7650(1.564) = $11,964.17