After being compounded for a period of 5 years, the amount will rise to $5,200.82.
The interest is given on an annual basis and so is the period yet the compounding period is quarterly. The first thing to do therefore, is to convert the interest and period to quarterly measures.
Interest = 8% / 4 = 2% per quarter
Periods = 5 x 4 = 20 quarters
Amount will be $3,500
The amount after 5 years will be:
= Amount x ( 1 + rate) ^ number of periods
= 3,500 x ( 1 + 2%) ²⁰
= $5,200.8158859
= $5,200.82
In conclusion, the amount will be $5,200.82 after 5 years.
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