Question

Trey invested $72,000 in an account that pays 7.00 percent APR interest compounded quarterly (four times a year). How much money will he have at the end of 5 years?

Answer 1

Solution:
	Money at end of 5 years =$101,864.03
Working Notes:
	C0 = Investment = $72,000
	FV=Future worth of the investment after 5 years =??
	r=rate of interest=APR/No of times compounded in a year = (7 %/4) =1.75% compounded quarterly
	n = no. Of periods = no. of years x No of times compounded in a year = 5 x 4 = 20
	Using future value formula
	FV= C0 x (1+r)^n
	FV= $72,000 (1 + 1.75%)^20
	FV = $72,000 (1 + 0.0175)^20
	FV = 101,864.0301
	FV = $101,864.03
	Money at end of 5 years =$101,864.03
Please feel free to ask if anything about above solution in comment section of the question.