Question

What amount will an account have after 2 years if $2950 is invested at an annual rate of 8.4% compounded quarterly? Also, determine the investment into an account at an annual rate of 7.8% compounded continuously for the same period of time to accumulate $3742.

Answer 1

The amount if $2950 is invested at an annual rate of 8.4% compounded quarterly is $3486

Compound interest

Compound interest is given by:

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

where t is the period, r is the rate, P is the initial amount, A is the final amount and n is the times compounded.

Given P = 2950, r = 0.084, n = 4, t = 2, hence:

$A=2950(1+\frac{0.084}{4} )^{4*2}\\\\A=\ 3486\\\\For \ r=0.078, A=3742,t=2,n=1:\\\\3742=P(1+\frac{0.078}{1} )^{1*2}\\\\P=\ 3220$

The amount if $2950 is invested at an annual rate of 8.4% compounded quarterly is $3486

Find out more on Compound interest at: brainly.com/question/24924853