Julius has placed K5000 in a term deposit account paying 6.5% p.a. for three months. How much will his investment be worth at the end of the three months?
To calculate the value of Julius' investment at the end of the three months, we can use the formula for calculating compound interest:
A = P * (1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (K5000)
r = the annual interest rate (6.5% or 0.065)
n = the number of times the interest is compounded per year (assuming it is compounded quarterly, n=4)
t = the number of years the money is invested for (3 months or 0.25 years)
Plugging in the values:
A = K5000 * (1 + 0.065/4)^(4*0.25)
A = K5000 * (1 + 0.01625)^1
A = K5000 * 1.01625
A = K5081.25
Therefore, the value of Julius' investment at the end of the three months will be K5081.25.