Question

Suppose that $1200 is invested at 612%, compounded quarterly. How much is in the account at the end of 5 years?

Answer 1

Answer:

$\ 1,656.50$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=5\ years\\ P=\ 1,200\\ r=6\frac{1}{2}\%=6.5\%=6.5/100=0.065\\n=4$  

substitute in the formula above

$A=1,200(1+\frac{0.065}{4})^{4*5}$  

$A=1,200(1.01625)^{20}$  

$A=\ 1,656.50$