Answer to Question #129337 in Financial Math for Lauren Daniel

Question

You deposit $3000 into a bank account that compounds interest quarterly. If the APR is 2.5%, how much will you have in 5 years? Round to the nearest dollar, no commas. *

Answer 1

A=P(1 + r/n)^nt

Where;

A=the new balance

P= principle amount ($3000).

r= interest rate in decimal form (0.025).

n= the number of times it is compounded (4).

t= the time 5 years.

A=P(1 + r/n)^nt

A=3000(1+ 0.025/4)⁽⁵⁾⁽⁴⁾

=3000(1+ 0.00625)²⁰

=3000(1.00625)²⁰

=3398.1232

=$ 3398