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Company Y deposits $3 million in bank

Accounting

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.

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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

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