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    1Kodiak's Avatar
    1Kodiak Posts: 3, Reputation: 1
    New Member
    		  
    #1

    May 19, 2007, 05:48 PM
    Accumulate Account
    How much will accumulate in an account with an intitial deposit of $100 and which earns 10% interest compounded quarterly for three years
    A. 952
    B. 1600
    C. 1728
    D. 3973
    bunnyKutty's Avatar
    bunnyKutty Posts: 60, Reputation: 5
    Junior Member
    		  
    #2

    May 20, 2007, 08:06 AM
    Future value of cash flow = Cash flow * Compounding factor @ 2.5% for 12 years
    Interest is compounded 4 times thus rate of interest will be 10%/4 = 2.5%
    Interest is compounded 4 times in a year therefore the interest is compounded 3 * 4 =12 times.
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