Today you are going to put $45,000 into an investment. You expect to earn

Today you are going to put $45,000 into an investment. You expect to earn an APR (based on quarterly compounding) of 7.16%. How much will you have in the account in exactly 8 years? To nearest $0.01.

Solutions

Expert Solution

We use the formula:
A = P(1+r/4)^4n

where
A = future value
P = present value
r = rate of interest
n = time period.

A = $45,000*(1+0.0716/4)^(4*8)

= $45,000*(1+0.0179)^(32)

= $45,000*(1.0179)^(32)

= $45,000*1.76426435

= $79,391.90

You will have in the account in exactly 8 years is 79,391.90.

Junaid answered 1 year ago

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