Question

Suppose that when your friend was​ born, your​ friend's parents deposited ​$ 2000 in an account paying 6.3​% interest compounded quarterly. What will the account balance be after 18 ​years?

Answer 1

$6161.43

Explanation:

The compound interest formula applies.

A = P(1 + r/n)^(n·t)

where A is the account balance, P is the principal amount ($2000), r is the annual interest rate (0.063), n is the number of compoundings per year (4), and t is the number of years (18).

Filling in the given numbers, you have ...

A = $2000·(1 +.063/4)^(4·18) ≈ $6161.43