(a - ) A=P[1 +r/n]^(nt)
A =5,000 x [1 + 0.05/4]^(5*4)
A =5,000 x [1.0125]^20
A =5,000 x 1.282037
A = $6,410.19
b- Use the same formula as above:
10,000 =5,000 x 1.0125^n, where n = number of quarters. Divide both sides by 5,000
2 = 1.0125^n take the log of both sides
n = Log(2) / Log(1.0125)
n =~56 quarters
56/4 =~14 years
c- Use the same formula as above:
A =5,000 x [1 + 0.05/12]^(5*12), calculate the as as in "a" above:
A =$6,416.79
$6,416.79 - $6,410.19 =$6.60 the difference between comp. monthly and comp. quarterly.