Answer:
Future Value= $23,906.36
Explanation:
Giving the following information:
Pearl Henry deposited $18,850 in a money market certificate that provides an interest of 8% compounded quarterly if the amount is maintained for 3 years.
First, we need to calculate the real interest rate:
Interest rate= 0.08/4= 0.02
To calculate the future value, we need to use the following formula:
FV= PV*(1+i)^n
n= 3*4= 12
FV= 18,850*(1.02^12)= $23,906.36
Answer: $23,906.36
Explanation:
GIVEN THE FOLLOWING ;
Deposit(present value(PV)) = $18,850
Interest rate (r) = 8%
Time(t) = 3years
However, interest is compounded quaterly(every 3 months), 4 times a year.
Therefore,
Interest rate(r) = 8% ÷ 4 = 0.02
Time(t) = 3 × 4 = 12
Earning after 3 years( future value(FV) ) =
FV = PV × (1 + r)^t
FV = $18,850 × (1 + 0.02)^12
FV = $18,850 × 1.02^12
FV = $23,906.36
