Asked by Emily
Jose invests $4000 in an investment account paying 8% annually for 12 years. Suppose the interest was compounded quarterly instead of annually.
How much would the future value of the investment increase?
Enter your answer as a dollar amount, such as: $302.26
How much would the future value of the investment increase?
Enter your answer as a dollar amount, such as: $302.26
Answers
Answered by
henry2,
P1 = Po(1+r)^n. Compounded annually.
r = annual % rate.
n = the number of compounding periods.
P1 = 4000(1+0.08)^12 = $10,072.68.
P2 = Po(1+r)^n. Compounded quarterly.
r = 8/4 = 2% = quarterly % rate.
n = 4*12 = 48 compounding periods.
P2 = 4000(1+0.02)^48 =
P2-P1 =
r = annual % rate.
n = the number of compounding periods.
P1 = 4000(1+0.08)^12 = $10,072.68.
P2 = Po(1+r)^n. Compounded quarterly.
r = 8/4 = 2% = quarterly % rate.
n = 4*12 = 48 compounding periods.
P2 = 4000(1+0.02)^48 =
P2-P1 =
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