... the account after 10 years?
Responses (1)
This is just simple arithmetic after you set it up. First, interest is always given as the annual rate, so you divide that by 4 to get the rate per quarter. So you are looking at 1.75% for 40 interest periods. 1.75% means the factor is 1.0175.
With initial deposit D, after one period you have pv = 1.0175 x D. So that becomes the new value of D, and after the second period pv = 1.0175 x 1.0175 x D. So then we write the general equation pv(N) = (1.0175)^N x D. That says after N periods, the present value equals the initial deposit times the interest factor to the power of N.
pv(40) = (1.0175)^40 x 2000 = 4003.19