Question

Isabelle invested $25,000 into an account that earns 3% annual interest compounded quarterly. If she makes no other deposits into the account, what will be the balance of her account in 20 years? Round to the nearest whole dollar.
$43451

$38451

$45451

$52451

Answer 1

Answer: $45451

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 = 25000

r = 3% = 3/100 = 0.03

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

t = 20 years

Therefore,

A = 25000(1+0.03/4)^4 × 20

A = 25000(1+0.0075)^80

A = 25000(1.0075)^80

A = $45451