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.)

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA3: Time Value Of Money
Section: Chapter Questions
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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.)
Transcribed Image Text: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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