Question

3. Gavin deposited $1500 into his savings account that is compounded quarterly at an interest rate of 1.5%. How much money will Gavin have after 5 years? Must show setup and answer for credit.

Answer 1

we know that

The compound interest formula is equal to

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

substitute in the formula above

Explanation:

Answer 2

`\$1,616.60`

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=5\ years\\ P=\$1,500\\ r=1.5\%=1.5/100=0.015\\n=4`

substitute in the formula above

`A=1,500(1+(0.015)/(4))^(4*5)`

`A=1,500(1.00375)^(20)`

`A=\$1,616.60`