Question

What is the final amount of $105.00 that is put into a savings account with 8% interest rate for 25 years, if the interest is compounded 4 times per year?

Answer 1

A=105×(1+0.08÷4)^(4×25)
A=760.68

Answer 2

Given: The principal amount (P) = $ 105.00, rate of interest(r) = 8% and t= 25 years and number of times interest compounded per year (n) =4.

Use formula to find the final amount i.e,

`A =P(1+(r)/(100n))^(nt)` ......[1] ; where r is the rate of interest , n is the number of times interest compounded per year and P is the Principal.

Now, substitute the given values of P , r, n and t in [1] we get;

`A = 105 * (1+(8)/(100 * 4))^(4* 25)`

or

`A =105 * (1+(8)/(400))^(100)`

Simplify:

A = $ 760.687842416

therefore, the final amount is $ 760.68 (approx.)