Chapter 4, Problem 4PROB

Summary Introduction

St invested $950 five years ago at 7.2% interest compounded monthly. Sh invested $900 five years ago at 8% interest compounded quarterly.

Future value is the value of the current investment or series of payments in the future compounded at predetermined interest rate for a specified period.

$FV=PV{\left(1+\frac{r}{m}\right)}^{n\times m}$

Here,

The future value is “FV”.

The present value is “PV”.

The interest rate is “r”.

The maturity period of time period is “n”.

The no of compounding in a year is “m”.