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Wendy has $1,000 that she invests in an account that pays 3.5% interest compounded quarterly. How much money does Wendy have at the end of 5 years? Round your answer to two decimal places. (Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.) (This problem is similar to the geese problem in #2. The difference is that this interest is compounded quarterly whereas the geese increase is calculated annually. You can first assume the compound interest is calculated annually and then figure out how to calculate it quarterly, monthly, or even daily. The more frequently an interest is compounded, the higher the gain.) 

 

 

please explain 

 Mar 3, 2021
 #1
avatar+31277 
+3

3.5 %  interest componded 4 times a year

  interst per period ( 3 months) in DECIMAL  form =   .035/4

     5 year would be   5 x 4 = 20 periods

 

FV = future value    PV = present value (1000)

FV = 1000 ( 1 + .035/4)20        That's it ....calculate away....

 Mar 3, 2021
 #2
avatar+550 
+2

thank you!!

xxJenny1213xx  Mar 3, 2021
 #3
avatar+550 
0

sry to ask again but i dont understand why you need to plus 1 in FV = 1000 ( 1 + .035/4)^20...

xxJenny1213xx  Mar 3, 2021

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