Noah invested Php118,703 at 5% interest compounded quarterly for 1 years. What is the compound amount (future value) of his investment?
Question
Noah invested Php118,703 at 5% interest compounded quarterly for 1 years. What is the compound amount (future value) of his investment?
Solution
To calculate the future value of an investment with quarterly compounding interest, you can use the formula:
FV = P (1 + r/n)^(nt)
where:
- FV is the future value of the investment
- P is the principal amount (the initial amount of money)
- r is the annual interest rate (in decimal form)
- n is the number of times that interest is compounded per year
- t is the time the money is invested for in years
Given in the problem:
- P = Php118,703
- r = 5% = 0.05 (in decimal form)
- n = 4 (since interest is compounded quarterly)
- t = 1 year
Substitute these values into the formula:
FV = Php118,703 * (1 + 0.05/4)^(4*1)
Solving the equation will give you the future value of Noah's investment.
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