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An amount of $2,500 is deposited in a savings account that earns 2.5% interest. Which is the future value

after 10 years if the interest is compounded quarterly?

User Orysia
by
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1 Answer

4 votes

Answer:

$3,208

Step-by-step explanation:

The computation of the future value is shown below;

As we know that

Future valie = Present value × (1 + rate of interest)^number of years

where

Present value is $2,500

Rate of interest = 2.5% ÷ 4 = 0.625%

And, the time period is = 10 × 4 = 40

So, the future value is

= $2,500 × (1 + 0.625%)^40

= $3,208

User Shameka
by
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