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A young graduate looks to save money to buy a house 5.00 years from today. He is somewhat conservative and will invest his money in a bond fund that pays 6.00% APR with quarterly compounding. The graduate invests $12,370.00 today. How much will his account be worth in 5.00 years

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facundobuzzetti

Answer:

FV= $16,660.60

Explanation:

Giving the following information:

Number of periods= 5*4= 20 quarters

Interest rate= 0.06/4= 0.015

Initital investment= $12,370

To calculate the future value after 5 years, we need to use the following formula:

FV= PV*(1+i)^n

FV= 12,370*(1.015^20)

FV= $16,660.60

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