In accordance with the compound interest model, the future value if you invest $ 1200 at 5.25 % compounded quarterly for two years is $ 1807.
The compound interest model is based on the assumption that the initial capital obtain gains continuously in time. This model is represented by the following expression:
C' = C · (1 + r/100)ˣ (1)
Where:
Please notice that a year consists in four quarters. If we know that C = 1200, r = 5.25 and x = 8, then the current capital is:
C' = 1200 · (1 + 5.25/100)⁸
C' = 1807
In accordance with the compound interest model, the future value if you invest $ 1200 at 5.25 % compounded quarterly for two years is $ 1807.
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