SOLUTION: $3000 was invested: Karen invests the money in a 3 year fixed term investment account paying 4.8% interest compounding quarterly. She withdraws her money after 3 years.

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Question 1088938: $3000 was invested:
Karen invests the money in a 3 year fixed term investment account paying 4.8% interest compounding quarterly. She withdraws her money after 3 years.
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
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.

time period could be years, months, days, weeks.
it's the time period that the interest that you earn is compounded.

rate = annual rate divided by compounding periods per year.
n = the number of years times the compounding periods per year.

rate = rate percent divided by 100.

in your problem.

p = 3000
f = what you want to find.
r = 4.8% / 4 / 100 = .012 per quarter
n = 3 * 4 = 12 quarters

the formula becomes:

f = 3000 * (1 + .012) ^ 12 = 3461.683873

use a time value calculator and you'll get the same thing.

one such calculator can be found at https://arachnoid.com/finance/

you enter:

present value = 3000
future value = 0 or blank
number of periods = 3 * 4 = 12
payment amount = 0
interest rate per time period % = 4.8 / 4 = 1.2
payment at end

you make your entries and then select FV and the calculator tells you what the future value is.

it will tell you that the future value is -3461.68.

this agrees with what i calculated above.

note that the calculator uses rate percent rather than rate.
this means 4.8/4 instead of 4.8 / 400
note that future value will show up as negative since present value was entered as positive.

i would have shown you a picture but my website is down at this time.

you can do the calculations yourself and see what i mean.