00:01
In a compounding interest screen, the amount or certain value grows according to the following equation.
00:10
A equals p times 1 plus r over n raised to the power of n times t, where a is the future value of the initial amount, p, r is the interest rate, n is the number of compounding in a year, and t is the time in years.
00:40
So, in this problem, we're going to find the present or rather the future value for an initial investment of $7 ,500 on an compounding interest scheme that gives interest rate of 2 .2 percent, or that's 0 .022 over six years if the interest is compounded quarterly.
01:15
So, in a quarter or in a year, our four quarters, so n equals four.
01:20
So, you say a equals 7 ,500 times 1 plus 0 .022 divided by 4 raised to the power of 4 times 6...