Question

Find the amount of money in an account after 4 years if $1800 is deposited at 5% annual interest compounded quarterly.

Answer 1

Answer:

$2195.80

Step-by-step explanation:

For a initial principal, P compounded with period k over n years at an annual interest rate, r, the amount (A(n)) at the end of n years is determined using the function:

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

In the given case:

P=$1800

n=4 years

r=5%=0.05

Since it is compounded quarterly, Period, k=4

Therefore, the amount of money in the account after 4 years is:

$A(n)=1800(1+\frac{0.05}{4})^{4*4}\\=1800(1+0.0125)^{16}\\=1800(1.0125)^{16}\\=\ 2195.80$

After 4 years, there will be $2195.80 in the account.