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Homework answers / question archive / Company Y deposits $3 million in bank
Company Y deposits $3 million in bank. The interest rate is 12% and is compounded quarterly.
Determine the value of the deposit at the end of the third year.
Computation of the value of deposit at the end of the third year:-
FV = PV*(1+rate)^n
Here,
n = 3*4 = 12 periods (quarterly)
rate = 12%/4 = 3% (quarterly)
FV = $3,000,000*(1+3%)^12
= $3,000,000*1.42576
= $4,277,282.66 Or $4.28 million