Question

Determine the amount of money in a savings account at the end of 3 years, given an initial deposit of $4,000 and a 4 percent annual interest rate when interest is compounded: Use Appendix A for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

a, annually

b. semiannually

c. quarterly

Answer 1

• 	FV =	Future Value
  	PV =	Present Value
  	r =	rate of interest
  	n=	no of period
  a)	FV =	PV (1 + r )n
  	FV =	4000*(1+4%)^3
  	FV =	4499.46
  b)	FV =	PV (1 + r )n
  	FV =	4000*(1+4%/2)^6
  	FV =	4504.65
  c)	FV =	PV (1 + r )n
  	FV =	4000*(1+4%/4)^12
  	FV =	4507.30