Question

If $600is invested at 8% compounded quarterly,what is the amount after 5 years?How much interest is earned?

Answer 1

Invested amount = $600

Calculating the Future value at the end of year 5;-

Future Value = Invested Amount*(1+r)^n

Where,

r = Periodic Interest rate = 8%/4 = 2%

n= no of periods = 5 years*4 = 20

Future Value = $600*(1+0.02)^20

Future Value = $600*1.48594739598

Future Value = $891.57

- Total Interest earned = Future Value - Invested amount

= $891.57 - $600

Total Interest earned = $291.57

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating