Question

Lynne invested $35,000 into an account earning 4% annual interest compounded quarterly. She makes no other deposits into the account and does not withdraw any money. What is the balance of Lynne's account in 5 years?

Answer 1

To find the balance of Lynne's account in 5 years, you need to use the formula for compound interest. The balance is $42,665.

Step-by-step explanation:

To find the balance of Lynne's account in 5 years, we need to use the formula for compound interest:

A = P(1 + r/n)ⁿˣt

Where:

• A is the final balance of the account
• P is the initial investment
• r is the annual interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

Plugging in the values for Lynne's account, we have:

A = $35,000(1 + 0.04/4)⁽⁴ˣ⁵⁾

A = $35,000(1 + 0.01)²⁰

A = $35,000(1.01)²⁰

A = $35,000 * 1.219

A = $42,665

Answer 2

Data:
P = 35000
r = 4% = 0,04
n = 4
t = 5
P' = ?
I = ?

We have the following compound interest formula


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



`P' = 35000*(1+(0,04)/(4))^(4*5)`

`P' = 35000*(1+0,01)^(20)`

`P' = 35000*(1,01)^(20)`

`P' = 35000*(1.22019003995...)`

`P' \approx 42,706.66`

So the new principal
`P'` after 5 years is approximately $42,706.66.Subtracting the original principal from this amount gives the amount of interest received:
`P' - P = I`

`42,706.66 - 35000 = \boxed{7,706.66}`