Question

26.

An investment of $15,000 is made for three years at 4.5%

compounded quarterly.

a)

Determine the maturity value of the investment.

b)

What is the amount of compound interest earned on the

investment?

Answer 1

$FV=PV(1+\frac{r}{n})^{n×t}$

$=15000(1+\frac{0.045}{4})^{4×3}$

$=15000(1.01125)^{12}$

$=15000(1.14367)=\$17155.05$

Maturity value of the investment$=\$17155.05$

b) The amount of compound interest earned on the investment

$=\$17155.05-\$15000=\$2155.05$