If $3000.00 is invested for seven years and seven months at 6% p.a. compounded quarterly, calculate the maturity value.
A) $3763.18
B) $3776.32
C) $4745.43
D) $4712.57
E) $4882.57

Question

Quizplus · Accepted Answer

First, we need to calculate the total number of periods the investment will go through. In this case, since the interest is compounded quarterly, we have:

7 years and 7 months = 7 × 4 quarters + 7 quarters + 1 extra month
= 28 quarters + 7 quarters + 1/3 quarters (since there are three months in a quarter)
= 35 1/3 quarters

Next, we need to calculate the interest rate per quarter. Since the annual interest rate is 6%, the quarterly interest rate is 6%/4 = 1.5%.

Using the formula for compound interest, the maturity value can be calculated as:

$3000 × (1 + 0.015)^{35+1/3} = $4712.57

Therefore, the best choice is D.

If $300000 Is Invested for Seven Years and Seven Months at at 6