I am having trouble understanding on how I should answer this question and write out a timeline for it.
An investor Invests £2000 now and an extra £1500 in 2 years from now. What is the total of his investment after 4 years. Write a timeline to support this
(The interest rate is 4% per annum compounding quarterly)
Any help on understanding would be greatly appreciated .
On
"Write a timeline" suggests a spreadsheet to me. Make a line for every quarter with the balance listed. Start with $2000$, multiply by $1.01$, and add in the $1500$ at the appropriate line. Your output would look something like $$\begin {array}{r r}Q1&2000\\Q2&2020\\Q3&2040.20 \end {array}$$ and keep going. You should state these are the balances at the beginning of each quarter and add one more line to get the end of $Q16$.
The quarterly rate is $0.01$ and the number of quarters are $16$ for the $2000$ and $8$ for $1500$
For the first $2000$ the investor gets $$2000(1+.01)^{16} = 2345.157290$$ For the $1500$ he/she gets $$1500(1+.01)^8 = 1624.285058$$
The total investment is $$3969.442348 \approx 3969$$