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?