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20 October, 13:05

Your 6 1/4 year investment of $40,000 at 14% compounded quarterly is worth how much now?

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  1. 20 October, 16:56
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    The formula to be used here is:

    F = P (1+i) ⁿ

    where

    P = 40000

    n = 6 1/4 years

    Let's find i first which has to be converted to compounded annually.

    i = (1 + r/m) ^m - 1

    where m = 4 because there are 4 quarters in 1 yr; and r is the given 0.14.

    i = (1 + 0.14/4) ⁴ - 1 = 0.1475

    Thus,

    F = (40000) (1+0.1475) ^ (6 1/4)

    F = $94,517.96
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