If $600is invested at 8% compounded quarterly,what is the amount after 5 years?How much interest is earned?
Invested amount = $600
Calculating the Future value at the end of year 5;-
Future Value = Invested Amount*(1+r)^n
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
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