To calculate the future value of periodic deposits compounded quarterly over 6 years, we can use the formula for compound interest:
FV = P(1 + r/n)^(nt)
Where:
FV = Future value of the investment
P = Periodic deposit amount
r = Annual interest rate (converted to decimal form, so 5.5% would be 0.055)
n = Number of compounding periods per year (quarterly compounding would be 4)
t = Number of years the investment is held for
Given that the periodic deposit is made quarterly, we can calculate the future value as follows:
P = 1 (assuming a deposit of 1 unit of currency)
r = 0.055
n = 4
t = 6
FV = 1(1 + 0.055/4)^(4*6)
FV = 1(1 + 0.01375)^24
FV = 1(1.01375)^24
FV = 1(1.3886478)
FV ≈ 1.39
Therefore, the future value of the periodic deposit after 6 years, with an annual interest rate of 5.5% compounded quarterly, would be approximately 1.39 times the amount of each periodic deposit made.
Periodic deposit for 5.5 compounded quarterly over 6 years
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