Question

Brenda invests $4500 in a savings account earning 5.5% interest compounded quarterly. What will the account balance be after 7 years?

Answer 1

Answer: The account balance will be $6596 after 7 years.

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $4500

r = 5.5% = 5.5/100 = 0.055

n = 4 because it was compounded 4 times in a year.

t = 7 years

Therefore,.

A = 4500(1 + 0.055/4)^4 × 7

A = 4500(1 + 0.01375)^28

A = 4500(1.01375)^28

A = $6596