SOLUTION: Find the future value of $2000 if it is invested for 4 years at an annual interest rate of 10% compounded every 3 months.

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Question 1120187: Find the future value of $2000 if it is invested for 4 years at an annual interest rate of 10% compounded every 3 months.

Answer by Theo(13342) (Show Source):
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f = p * (1 + r) ^ n

f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods.

in your problem, the equation becomes:

f = 2000 * (1 + .10/4) ^ (4*4)

this results in a future value of 2969.011241

every 3 months occurs 4 times a year.

this means the interest is compounded quarterly.

the annual interest rate (not the percent) is divided by 4 to get the quarterly interest rate.

the number of years is multiplied by 4 to get the number of quarters.