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An initial investment of $12,000 is invested for 2 years in an account that earns 4% interest compounded quarterly. Find the amount of mnoey in the account at the end of the period.

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  1. P = Po(1+r)^n.

    Po = $12,000

    r = (4%/4)/100% = 0.01 = Quarterly % rate expressed as a decimal.

    n = 4Comp./yr. * 2yrs. = 8 Compounding periods.

    Plug the above values into the given Eq.
    and get $12,994.28.

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