Question

gavin deposited $1500 into his savings account that is compounded quarterly at an interest rate of 1.5%. How munch money will gavin have after 5 years?

Answer 1

Answer:

The money will gavin have after 5 years is 1616.59$

Explanation:

We know that compound interest is given by  

$A=P\left(1+\frac{r}{n}\right)^{n t}$

          Where A = final amount

       P = Principal amount = $1500 (given)

r  = interest rate = 1.5% = 0.015

n = no. of times interest applied per time period = given quarterly = 4

t = time period = 5 years  

    So,

$A=1500\left(1+\frac{0.015}{4}\right)^{4 \times 5}$

$1500\left(1+\frac{0.015}{4}\right)^{20}$

 = 1616.59$ which is the money will gavin have after 5 years