Question

You deposit $175 in an account that pays 4% interest compounded quarterly. How much will you have in the account after 2 years? ​

Answer 1

`\$189.50`

Explanation:

we know that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=2\ years\\ P=\$175\\ r=0.04\\n=4`

substitute in the formula above

`A=\$175(1+(0.04)/(4))^(4*2)=\$189.50`