Question

Payton bought a 15-year treasury bond for a face amount of $700. The 2.5% interest will be compounded quarterly. What will the future value of Patrick’s investment be when he goes to cash it in on the maturity date 15 years from now?

Answer 1

Do you know what the compounded interest formula is?

Answer 2

\[A=P(1+\frac{ R }{ N })^{NT}\]

Answer 3

i just cant't seem to do it right :/

Answer 4

Ok, I can try to walk you through it. :)

Answer 5

thankyou!

Answer 6

We can put in 700 for P, because this is the principal amount. (initial investment)
We can put .025 for r, because r is the rate of interest expressed as a decimal (and 2.5% = 0.25)
We can put 4 in for n, because this is how many times it is compounded a year.
We can put in 15 for t, because this is how many years it is gaining interest.

Now we have

Good so far?