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Question 10.EX.2: QUARTERLY COMPOUNDING Suppose we invest $200,000 in an inves...

QUARTERLY COMPOUNDING

Suppose we invest $200,000 in an investment that pays 4% interest per year, compounded quarterly. What will be the future value of this investment at the end of 10 years?

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The given information is:

i = 4%/4 = 1% and  N = 10 × 4 = 40 quarters.

Therefore, FV = $200,000 (1 + 0.01)^{40} = $297,772.75

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