SOLUTION: A university endowment fund has invested $5 million in United States government certificates of deposit. Interest of 6 percent per year compounded quarterly, will be earned for 15

Question 1164640: A university endowment fund has invested $5 million in United States government certificates of deposit. Interest of 6 percent per year compounded quarterly, will be earned for 15 years. To what amount will the investment grow during this period? How much interest will be earned?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
formula to use is f = p * (1 + r) ^ n
f if the future value
p is the present value
r is the interest rate per time period (quarters of a year in this problem)
n is the number of time periods (quarters of a year in this problem)

your formula becomes f = 5,000,000 * (1 + .06/4) ^ (15 * 4)
solve for f to get f = 12,216,098.88
that's how much the investment will grow to during the investment period.
the interest earned will be that minus the initial investment = 12,216,098.88 minus 5,000,000 = 7,216,898.88.

answers are rounded to the nearest penny.

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