If 400 is invested at 11 compounded Aannually B quarter C mo

If $400 is invested at 11% compounded (A)annually, (B) quarter, (C) monthly, what is the amount after 6 years?

A=

B=

\'C=

Solution

The formula for compound interest is F = P( 1 + r)ⁿ , where P is the initial amount/principal , F is the future value, r is the rate of interest for the period in decimals and n is the number of terms/periods.

Then,

A = 400( 1+ 0.11)⁶ = 400(1.11)⁶ = 400*1.870414552 = $ 748.17 ( on rounding off to the nearest cent)

B = 400( 1 + 0.11/4)^6*4 = 400( 1+0.0275)²⁴ = 400(1.0275)²⁴ = 400* 1.917626105 = $ 767.05.

C = 400( 1 + 0.11/12)^6*12 = 400( 1+ 009167)⁷² = 400(1.009167)⁷² = 400*1.929029722 = $ 771.61.