Question

Use the formula for computing future value using compound interest to determine the value of an account at the end of 6 years if a principal amount of $6,000 is deposited in an account at an annual interest rate of 6​% and the interest is compounded quarterly.

Answer 1

Answer: the value of the account at the end of 6 years is is $8577

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 = 6000

r = 6% = 6/100 = 0.06

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

t = 6 years

Therefore,.

A = 6000(1+0.06/4)^4 × 6

A = 6000(1+0.015)^24

A = 6000(1.015)^24

A = $8577