Question

Find the amount of money accumulated if you invest $10,000 at 3% interest compounded quarterly for 2 years. Round your answer to the nearest cent.

Answer 1

$10,625.99

Explanation:

The future value formula is useful for this.

FV = P(1 +r/n)^(nt)

where interest at rate r is compounded n times per year for t years. P represents the principal invested.

FV = $10,000(1 +.03/4)^(4·2) = $10000(1.0075^8) ≈ $10,625.99

The accumulated value will be $10,625.99.