Question

Question 2 (6 points)

You invest $15,000 in a savings account with an annual interest rate of 2.5% in
which the interest is compounded quarterly. How much money should you expect to
have in the account after 5 years? Show your work to receive full credit!
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Answer 1

$16,991

Explanation:

Rate = r = 2.5%

Times = b = 4

A = P [1 + (r / b)]ⁿᵇ

A = $15,000 [1 + (0.025 / 4]⁵ ˣ ⁴

A = $15,000 [1 + 0.00625]²⁰

A = $15,000 [1.00625]²⁰

A = $15,000 x 1.132708

A = $16,991