Question

Josh deposited $4000 into an account with 3% interest, compounded quarterly. Assuming that no withdrawals are made, how much will he have in the account after 3 years? Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

Answer:

Josh will get $4376 after 3 years.

Explanation:

The formula of Compound Interest is:

$A = P(1+\frac{r}{n})^{nt}$

where A = Amount

P = Principle

r = rate

n = Number of Compounding per year

t = total number of year

Here, P = 4000, r = 3% = 0.03, n = 4(quarterly), and t = 3.

Putting all these values in above formula:

$A = 4000(1+\frac{0.03}{4})^{4\times3}$

⇒ $A = 4000(\frac{4.03}{4})^{12}$

⇒ $A = 4000(1.0075)^{12}$

⇒ $A = 4000(1.094)}$

⇒ A = 4376

Hence, Josh will get $4376 after 3 years.