You invest $10,0 in Rapid Growth Funds, which appreciate by 4% per year, with yields reinvested quarterly. By how much will your investment have grown after 3 years?
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qtrly rate = 0.04/4 = 0.01
number of qrts = 3yrs * 4 qtrs per year = 12
10,0 * 1.01^12 = $11,268.25
growth rate: 1.01^12 – 1 = 0.12683, or about 12.68%
confirm: (11,268.25/10,0) – 1 = 0.12683…OR (11,268.25 – 10,0)/10,0 = 0.12683