Julius has placed K5000 in a term deposit account paying 6.5% p.a. for three months. How much will his investment be worth at the end of the three months?

Answer 1

To calculate the value of Julius' investment at the end of the three months, we can use the formula for calculating compound interest:

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

Where:
A = the future value of the investment
P = the principal amount (K5000)
r = the annual interest rate (6.5% or 0.065)
n = the number of times the interest is compounded per year (assuming it is compounded quarterly, n=4)
t = the number of years the money is invested for (3 months or 0.25 years)

Plugging in the values:

A = K5000 * (1 + 0.065/4)^(4*0.25)
A = K5000 * (1 + 0.01625)^1
A = K5000 * 1.01625
A = K5081.25

Therefore, the value of Julius' investment at the end of the three months will be K5081.25.