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Math Help - Investment Problem

  1. #1
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    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!
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  2. #2
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    Quote Originally Posted by lil_cookie View Post
    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?
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  3. #3
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    Awesome, that is what I thought it was just wanted to make sure...thank you!
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