Find the future value of $3500 at 3% compounded quarterly for 2 years
what is
3500(1.0075)^8 ?
To find the future value, we can use the formula for compound interest:
Future Value = Principal * (1 + Interest Rate / N)^(N * Time)
Where:
Principal = $3500
Interest Rate = 3% (or 0.03)
N = Compounding frequency per year (quarterly = 4)
Time = 2 years
Plugging in the values into the formula:
Future Value = $3500 * (1 + 0.03 / 4)^(4 * 2)
Simplifying the equation:
Future Value = $3500 * (1.0075)^(8)
Future Value = $3500 * 1.061717394
Calculating the final result:
Future Value = $3712.01
Therefore, the future value of $3500 at 3% compounded quarterly for 2 years is $3712.01.
To find the future value of $3500 at 3% compounded quarterly for 2 years, you can use the formula for compound interest:
Future Value = Principal * (1 + (interest rate / number of compounding periods))^ (number of compounding periods * number of years)
In this case, the principal is $3500, the interest rate is 3% (or 0.03 as a decimal), and the compounding is done quarterly (4 times per year) for 2 years.
Let's calculate the future value step-by-step:
1. Convert the interest rate to a quarterly rate: 3% / 4 = 0.75% or 0.0075 as a decimal.
2. Calculate the number of compounding periods: 4 (quarterly) × 2 (years) = 8.
3. Plug the values into the formula:
Future Value = $3500 * (1 + 0.0075)^8
4. Simplify the equation inside the parentheses:
Future Value = $3500 * (1.0075)^8
5. Calculate the value inside the parentheses:
Future Value = $3500 * 1.06161971875
6. Finally, calculate the future value:
Future Value ≈ $3716.07
So, the future value of $3500 at a 3% interest rate compounded quarterly for 2 years is approximately $3716.07.