Question

Suppose that when your friend was born, your friend’s parents deposited 60000 in an account paying 4.5% of interest compounded quarterly. What will the account balance be after 15 years?

Answer 1

Answer:

$117,398.71

Step-by-step explanation:

Lets use the compound interest formula provided to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 4.5% into a decimal:

4.5% -> $\frac{4.5}{100}$ -> 0.045

Since the interest is compounded quarterly, we will use 4 for n. Lets plug in the values now:

$A=60,000(1+\frac{0.045}{4})^{4(15)}$

$A=117,398.71$

The account balance after 15 years will be $117,398.71