Question

how much will $850 amount to be in three years if it is invested at 8% interest compounded quarterly for 3 years?

A. $886.47
B. $952.43
C. $1078.01
D. $1168.15

Answer 1

Compound Interest Formula

\(\large F = P(1 + \dfrac{i}{n})^{nt}\)

F = future value
P = present value
i = annual interest rate written as a decimal
n = number of times compounded per year
t = number of years

Answer 2

No.
Be careful how you plug in the numbers in the formula.
i = 8%, so use i = 0.08
Also, compounded quarterly means 4 times per year, so n = 4
t is the number of years, so t = 3

Answer 3

so F= 850(1+0.08/4)^8*4?
can you just help me set it up the right way? thank you

Answer 4

\(\large F = $850 \left(1 + \dfrac{0.08}{4} \right)^{4 \times 3} \)

Answer 5

You almost have it now.
Notice your exponent. You have 8 * 4
8 is the interest rate in percent. It does not go on the exponent.
The exponent is the number of compoundings per year (4) times the number of years(3)

Answer 6

so the answer is C? thank you ^^

Answer 7

Yes, answer is C.