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DedPeter [7]
3 years ago
12

Alma won a beauty contest and received $3,500 in cash. In 4 years, when Alma turns 21, she wishes to go to Las Vegas. Her parent

s agree to pay for her hotel and airfare, but she needs spending cash. Her credit union will pay 5% per year compounded quarterly. How much will Alma have for her trip when she turns 21, if she invests her money in this account?
Business
2 answers:
Daniel [21]3 years ago
7 0

Answer:

A = $4,269.61

Explanation:

This question is a compound interest problem, we will use the compound interest formula to solve the given problem.

Formula formula for compound interest is by;

A = P (1+ r÷n)^nt

We are given the following values as ;

P= $3,500

r = 5% = 0.5

n = 4

t = 4

Substituting the values into the formula we have;

A = $3,500( 1+ 0.5÷4)^4×4

A = $3,500(1 +0.0125)^16

A = $3,500(1.0125)^16

A = $3,500× 1.22

A = $4,269.61

max2010maxim [7]3 years ago
4 0

Answer:

Alma would have $ 4,269.61   for her trip in four years' time

Explanation:

The amount she would have for her trip in four years' time can be computed using the future value formula which is given as:

FV=PV*(1+r/t)^N*t

PV is the amount she has today which is $3,500

r is the rate of return the credit union offered her,that 5%

t is the number of times in a year the interest is compounded which is 4

N is the number of years the investment would last which is 4 years

FV=$3,500*(1+5%/4)^4*4

FV=$3,500*(1+1.25%)^16

FV=$3,500*(1.0125)^16

FV=$3,500*1.219889548

FV=$4,269.61  

Alma would have $ 4,269.61   for her trip in four years if the $3,500 is invested at 5% compounded quarterly

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