Question

You deposit $3000 into a money-market savings account which pays 4.8% compounded quarterly, and you make no withdrawals from or further deposits into this account for 3 years. How much money is in your account at the end of those 3 years?

Give answer in dollars rounded to the nearest cent. Do NOT enter "$" sign in answer.

Answer 1

$5265.71

Explanation:

We have been given that you deposit $3000 into a money-market savings account which pays 4.8% compounded quarterly.

We will use future value formula to solve our given problem.

`FV=C_0* (1+r)^n`, where,

`C_0=\text{Initial amount}`,

r = Rate of return in decimal form,

n = Number of periods.

`4.8\%=(4.8)/(100)=0.048`

`n=3* 4=12`

`FV=\$3,000* (1+0.048)^(12)`

`FV=\$3,000* (1.048)^(12)`

`FV=\$3,000* 1.7552354909370114`

`FV=\$5265.7064\approx \$5265.71`

Therefore, there will be $5265.71 in your account at the end of those 3 years.