Respuesta :
The value of the investment compounded quarterly at the end of 5 years is $242,970.00.
What is compounded quarterly?
Compounded quarterly is the "interest amount which is earned quarterly on an account or investment".
According to the question,
John rate of interest = 8%
Period (n) = 5years
Principal = $10,000
Amount of compounded quarterly = P(1+[tex]\frac{r/4}{100}[/tex])⁴ⁿ.
= 10000(1+[tex]\frac{8/4}{100}[/tex])⁴⁽⁵⁾
= 10000(1+[tex]\frac{2}{100}[/tex])²⁰
=10000([tex]\frac{102}{100}[/tex])²⁰
=10000(1.02)²⁰
=10000(1.4859)
=14,859.474.
As long as John deposits $10,000.00 every quarter of the term of the guaranteed rate is $228110.526.
In order to find the value of the investment at the end of the 5-year term
$14,859.474.+$228110.526
= $ 242,970.00
Hence, the value of the investment compounded quarterly at the end of 5 years is $242,970.00.
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