Question

A principal of ​$5500 is invested in an account paying an annual rate of 4​%. find the amount in the account after 3 years if the account is compounded​ semiannually, quarterly, and monthly.

Answer 1

We use the formula for compounding interest
`A(t)=P(1+ (r)/(n))^(nt)`, where P is the principal, r is the rate as a decimal, n is the number of times compounded per year, and t is the time.

We plug-in $5,500 for P, 0.04 for r, and 3 for t. The only thing we're changing is n.

For an account compounded semiannually, we use 2 for n. For quarterly, we use 4 for n. For monthly, we use 12 for n.

For semiannually, the account is worth $6,193.89. Quarterly, $6,197.54. Mostly, $6,200.00.