Question

Find the future value if you invest $1200 at 5.25% compounded quarterly for two years.

Answer 1

In accordance with the compound interest model, the future value if you invest $ 1200 at 5.25 % compounded quarterly for two years is $ 1807.

How to determine the current capital by compound interest model

The compound interest model is based on the assumption that the initial capital obtain gains continuously in time. This model is represented by the following expression:

C' = C · (1 + r/100)ˣ     (1)

Where:

• C - Initial capital
• C' - Current capital
• r - Interest rate
• x - Time, in quarters

Please notice that a year consists in four quarters. If we know that C = 1200, r = 5.25 and x = 8, then the current capital is:

C' = 1200 · (1 + 5.25/100)⁸

C' = 1807

In accordance with the compound interest model, the future value if you invest $ 1200 at 5.25 % compounded quarterly for two years is $ 1807.

To learn more on compound interests: brainly.com/question/14295570

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