A man invests $2000 into an account that accrues 8.5% interest compounded quarterly. He made the deposit of 2 years , i.e. for 8 quarters ( or 8 compounding periods)
Amount after n years is calculated by following equation :
Amount = Principal * ( 1 + Interest rate per compounding period ) ^ no. of compounding periods
The amount in his account after 2 years = 2000 * ( 1 + 0.085/4) ^ 8
= 2000 * (1.02125 ) ^ 8
= 2000 * 1.18319
= $2366.39
