Business Mathematics 114

Question

Suppose an investment of $13932.96 is held for 19 quarters at a rate of 5.43% compounded quarterly, what will be the value of the investment at maturity?

Answer 1

The formula for compound interest is A = P (1 + r/n)^nt, where P is the initial principal balance, r is the interest rate, n is the number of times interest is compounded per time period and t is the number of time periods.

Plugging in your values

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

A = 13932.96(1 + 0.0543/4)¹⁹ (Since they gave you t in quarters and not years, you don't have to multiply by 4)

A = $18001.36