Question

A person invests 1000 dollars in a bank. The bank pays 4% interest compounded quarterly. To the nearest tenth of a year, how long must the person leave the money in the bank until it reaches 1600 dollars?

Answer 1

Answer:

The amount is $8358.7 and the interest is $3858.7.

Step-by-step explination

STEP 1: To find amount we use formula:

A = P

1 +

r

n

n·t

A = total amount P = principal or amount of money deposited, r = annual interest rate n

= number of times compounded per year t = time in years In this example we have

P = $4500 , r = 7% , n = 2 and t = 9 years

After plugging the given information we have

A = 4500

1 +

0.07

2

2·9

A = 4500 · 1.03518

A = 4500 · 1.857489

A = 8358.7

STEP 2: To find interest we use formula A = P + I, since A = $8358.7 and P = $4500 we

have:

A = P + I

8358.7 = 4500 + I

I = 8358.7 − 4500

I = 3858.7