Question

You deposit $3600 in an account that pays 2.5% interest compounded quarterly. What is the balance to the nearest penny, after 12 years

Answer 1

Initial deposit = P = $3600
Interest rate = r = 2.5% = 0.025
Compounding Frequency = n = 4
Time = t = 12 years

The formula to be used will be:


`A=P(1+ (r)/(n))^(nt)`


Using the values, we get:


`A=3600(1+ (0.025)/(4))^(4*12) =$ 4854.96`

Therefore, the balance after 12 years, rounded to the nearest pennies will be $4854.96