Future Value of Compound Interest with Quarterly Compounding

John has invested $1,000 in a savings account that offers a nominal annual interest rate of 8%. The interest is compounded quarterly. How much will John's investment be worth at the end of 3 years?

To solve this, you can use the future value formula for compound interest, which is given by:

$$FV = P imes (1 + rac{r}{n})^{nt}$$

where:

• $$FV$$ = future value
• $$P$$ = principal amount ($1,000)
• $$r$$ = annual interest rate (0.08)
• $$n$$ = number of compounding periods per year (4 for quarterly)
• $$t$$ = number of years the money is invested (3)