If you invest 1000 today and your investment earns 4 annual

If you invest $1,000 today and your investment earns 4% annual interest with quarterly compounding, how much will your investment be worth at the end of 20 years? Round your answer to the nearest whole dollar and enter it in the space below as a positive value. Enter only numbers and a comma if the number is larger than three digits (e.g. 1,300), do NOT enter a dollar sign, minus sign, or decimal ab

Solution

1.We use the formula:
A=P(1+r/400)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$1000(1+0.04/4)^(4*20)

=$1000*2.216715217

=$2217(Approx).

2.

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=$1000[(1.04)^20-1]/0.04

=$1000*29.77807858

=$29778(Approx).