Finance quiz 36 question | Business & Finance homework help

To calculate this amount we must consider both compounding and time value of money. Compounding refers to reinvesting any earnings from accrued interest which can help maximize returns over time; in this case compound monthly for first five years and quarterly thereafter. Time value of money (TVM) represents how much a set amount today would be worth given a certain rate of return; this assumes that money has a greater value when received sooner rather than later as inflation reduces its purchasing power over time.

By applying these concepts together we can easily calculate potential earnings by factoring in different variables such as length of investment period or frequency/rate of compounding. In our example above, if we reinvested our initial deposit plus any earned interest payments made after each month/quarter period then by year 18 our new balance should reach around $7000 given these particular conditions.