Answered: Margaret Hillman invested $7,000 at…

Margaret Hillman invested $7,000 at 1.8% compounded quarterly for one year. Find the future value and the interest earned for the year. The future value is S. (Round to the nearest cent as needed.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

Question

Margaret Hillman invested $7,000 at 1.8% compounded quarterly for one year. Find the future value and the interest earned for the year.
The future value is $
(Round to the nearest cent as needed.)

Expert Solution

Step 1

GIVEN THAT,

Amount invested (P) = $7000

compounding = 4times a year = 1/4

rate of interest = 1.8%

= (1.8 / 100) * 1/4

rate of interest (i) = 0.0045

n = 1 years * number of compounding periods

n = 1 * 4times a year

n = 4

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