Compound interest with addition formula:
[tex]A=P(1+\frac{r}{n})^{nt}+\frac{PMT(1+\frac{r}{n})^{nt}-1}{\frac{r}{n}}[/tex]where,
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
PMT = Regular contributions (additional money added to investment)
in this example
P = 2500
r = 8% = 0.08
n = 4
t = 5 years
PMT = 2500
[tex]A=2500(1+\frac{0.08}{4})^{4\cdot5}+\frac{2500\cdot(1+\frac{0.08}{4})^{4\cdot5}-1}{\frac{0.08}{4}}[/tex]solving for A:
[tex]A=189408.29[/tex]Therefore, his investment after 5 years will be
$189,408.29
