Question

what is the future value if 5000.00 is invested for 2 years at 5% compounded every 4 months?The future value is?

Answer 1

We know that

• The principal is $5000.

,

• The interest rate is 5%.

,

• The compounding period is every 4 months.

,

• The time is 2 years.

We have to use the compounding interest formula

`A=P(1+(r)/(n))^(nt)`

Where P = 5000, r = 0.05, n = 3, and t = 2.

`\begin{gathered} A=5000(1+(0.05)/(3))^(3\cdot2) \\ A\approx5,521.30 \end{gathered}`

Hence, the future value is $5,521.30.