Question

Lucy invested $770 in an account paying an interest rate of 3.2% compounded

quarterly. Assuming no deposits or withdrawals are made, how much money, to the
nearest ten dollars, would be in the account after 12 years?

Answer 1

$1,128.75

Explanation:

Use Future value formula ; FV= PV (1+r)^t

• Amount invested ; the PV = 770

• rate ;r = 3.2%, however, it's compounded quarterly and the quarterly rate becomes (3.2% / 4 ) = 0.8%
• Total duration; t = 12 years, converted to quarters = 12*4 = 48

Next, plug in the numbers into the FV equation;

FV= 770*(1+0.008)^48

FV = 770* 1.46590404

FV = 1,128.746

Therefore, Lucy would have $1,128.75 in the account after 12 years.