1. ## Investment Problem

The Johns have $50,000 to invest for 18 months How much money will they have in 18 months if they invest the money in a certificate paying interest at the nominal rate of 5% compounded quarterly? Thanks! 2. Originally Posted by lil_cookie The Johns have$50,000 to invest for 18 months
How much money will they have in 18 months if they invest the money in a certificate paying interest at the nominal rate of 5% compounded quarterly?

Thanks!
Compounded quarterly means every 3 months;
so there are 18 / 3 = 6 compounding periods: understand?

During 1 year there are 4 quarters; so rate evety quarter = 5 / 4 = 1.25%.

So the \$50000 will accumulate to : 50000*(1 + .0125)^6

Fyi, standard formula is : A(1 + i)^n ; got that?

3. Awesome, that is what I thought it was just wanted to make sure...thank you!