Question

You deposit $400 into an account that pays 2% annual interest compounded quarterly.

Answer 1

a.

A = 400 (1 + (0.02)/4)^4t    where t = number of years and A = amount after t years

simplifying that becomes

A = 400 (1.005)^4t

b  amount after 5 years is

400 (1.005)^(4*5)  = 400 (1.005)^20 =  $ 441.96

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Answer 2

A.

A = 400 (1 + (0.02)/4)^4t    where t = number of years and A = amount after t years
simplifying that becomes

A = 400 (1.005)^4t

b  amount after 5 years is

400 (1.005)^(4*5)  = 400 (1.005)^20 =  $ 441.96