If you were told that an investment earned 4 per year how mu

If you were told that an investment earned 4% per year, how much would you assume was earned per quarter? Why? Using your answer from part (c), calculate how much the investment would be worth after 10 years of quarterly compounding? Show your calculation.

Solution

Answer c)

For quaterly, n=4

so

i/n will be

4%/4 = 1%

Thus, it will be 1% quarterly.

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answer d)

Let the principle is P , then amount will pe

A=P(1+0.01)^(10*4) = P*(1.01)^40

particularly if P=100, then

100*(1.01)^40= $ 148.89