Question

Tom deposits $2,000 into an account with an interest rate of 2.5% that is compounded quarterly. Rounding to the nearest dollar, what is the balance in Tom's account after 5 years?

Answer 1

Answer:

The balance in Tom's account is = $ 2265.41

Step-by-step explanation:

Principal amount = $ 2000

Rate = 2.5 %

Time = 5 years

Since Amount is compounded quarterly so

New rate of interest = $\frac{2.5}{4} = 0.625$

Time = 5 × 4 = 20 years

Now the amount in the account is given by

$A = P (1+\frac{R}{100} )^{T}$

$A = 2000 (1+\frac{0.625}{100} )^{20}$

A = $ 2265.41

Therefore the balance in Tom's account is = $ 2265.41