Question

Stacy Henry deposited $20,000 in a money market certificate that provides interest of 12% compounded quarterly if the amount is maintained for 2 years. How much will Stacy Henry have at the end of 2 years? (Round factor values to 5 decimal places, e.g. 1.25124. Round answers to the nearest whole dollar, e.g. 5,250.) using calculator

Answer 1

Total amount Stacy Henry will have after 2 years=$25,335

Step-by-step explanation:

To calculate the compound interest, we cause the formula for calculating compound interest;

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

where;

A=future value of the investment

P=Principal amount invested

r=annual interest rate

n=number of times the interest is compounded per unit time

t=time the money is invested for

In our case we are given;

P=$20,000

r=12%=12/100=0.12

n=every three months a year=12/3=4

t=2 years

replacing in the formula above;

A=20,000(1+0.12/4)^(4×2)

A=20,000(1+0.03)^8

A=20,000×1.26677

A=25,335

Total amount Stacy Henry will have after 2 years=$25,335