Question

determine the amount in an account after 18 months if 10000 is deposited in a savings account paying 1.6% interest compounded quarterly

Answer 1

$10,242.41

Explanation:

To calculate amounts with compounded interest, we use
`A=P(1+(r)/(n))^(nt)` where

-A is the total amount int he account after interest

-P is the principal or starting amount

-r is a decimal conversion of the percentage rate

-n is the number of times compounded a year

-t is the number of years

For this account, P=10000, r=0.016, n=4 for 4 quarters in a year, and t=1.5 since 18 months is 1.5 years. We substitute and find:

`A=10000(1+(0.016)/(4))^(4(1.5))`

`A=10000(1+0.004)^(4(1.5))=A=10000(1.004)^(6)=10000(1.024241)=10,242.41`