how much will John saves at the end of 4 years if he decides to invest $400 at the end of four months into an account which pays interest of 8% p.a compounded quarterly
To calculate the future value of John's investment after 4 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the initial investment amount ($400)
r = the annual interest rate (8% or 0.08)
n = the number of times the interest is compounded per year (quarterly, so 4)
t = the number of years the investment is held for (4 years)
Plugging in the values, we get:
A = $400(1 + 0.08/4)^(4*4)
A = $400(1 + 0.02)^16
A = $400(1.02)^16
A = $400(1.395441025)
A = $558.18
Therefore, at the end of 4 years, John will have saved $558.18 if he invests $400 at the end of four months into an account which pays 8% interest compounded quarterly.