How much will John saves at the end of four years if he decides to invest K400 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 four years with compound interest, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (K400)
r = the annual interest rate (8%)
n = the number of times the interest is compounded per year (4 times for quarterly)
t = the number of years the money is invested for (4 years)
Plug in the values:
A = K400(1 + 0.08/4)^(4*4)
A = K400(1 + 0.02)^16
A = K400(1.02)^16
A = K400 * 1.3596
A = K543.84
Therefore, John will have K543.84 at the end of four years if he invests K400 at the end of four months into an account earning 8% p.a. interest compounded quarterly.