Question

He deposits $4,500 in an account that pays 1.5% interest, compounded quarterly. What is his balance after 5 years?\

Answer 1

His balance is $4,849.65 after 5 years

Explanation:

A = P(1 + r/n)^nt

A = future value = ?

P = present value = $4,500

r = interest rate = 1.5% = 0.015

n = number of periods = 4

t = time = 5 years

A = P(1 + r/n)^nt

= 4,500(1 + 0.015/4)^4*5

= 4,500(1 + 0.00375)^20

= 4,500(1.00375)^20

= 4,500(1.0777)

= 4,849.65

A = $4,849.65

His balance is $4,849.65 after 5 years