Question

Suppose you deposit $1,250 at the end of each quarter in an account that will earn interest at an annual rate of 15 percent compounded quarterly. How much will you have at the end of four years

Answer 1

Answer:

The amount at the end of 4 years is $2,252.79.

Step-by-step explanation:

The amount formula for the compound interest compounded quarterly is:

$A=P[1+\frac{r}{4}]^{4t}$

Here,

A = Amount after t years

P = Principal amount

t = number of years

r = interest rate

Given:

P = $1,250, r = 0.15, t = 4 years.

The amount at the end of 4 years is:

$A=P[1+\frac{r}{4}]^{4t}\\=1250\times[1+\frac{0.15}{4}]^{4\times4}\\=1250\times1.80223\\=2252.7875\\\approx2252.79$

Thus, the amount at the end of 4 years is $2,252.79.