Question

Suppose that $772 is invested at 8.54% interest compounded quarterly. How much is in the account after 14 years?

Answer 1

http://math.about.com/library/weekly/aa042002a.htm

I have to refer to the formula for compound interest every time... I never remember. The link above is where I often look. There is an example about halfway down with compounding quarterly.

Answer 2

So if you started with P = 772, and your annual rate, r, is 8.54%...

The final amount after a SINGLE years is P (1 + r/4)^4

The formula divides the annual rate into quarters, and then the exponent compounds it over four quarters.

However, your problem has compounding quarterly for 14 years, not just 1. So you will have 4 x 14 = 56 quarters of compunding.

So after 14 years, you will have P (1 + r/4)^56

Answer 3

There's no shortcut... you just have to remember or be able to look up the formula, then put in your P, your interest rate, and the number of compounding periods until then end.