In accordance with the <em>compound interest</em> model, the <em>future</em> value if you invest $ 1200 at 5.25 % compounded quarterly for two years is $ 1807.
<h3>How to determine the current capital by compound interest model</h3>
The <em>compound interest</em> model is based on the assumption that the <em>initial</em> 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 <em>compound interest</em> model, the <em>future</em> 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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