Question

Jim opened an account with $400. The account pays 3 percent quarterly. How much is in the account at the end of 2 years? Round to the nearest dollar.

Use the compound interest formula, the formula A = p (1 + r/n) ^nt

Answer 1

A=400×(1+0.03÷4)^(4×2)
A=424.64

Answer 2

The money in the account at the end of 2 years is $424.64 .

Explanation:

Formula

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

Where A is the amount , r is the rate of interest in the decimal form , t is the time in years and n is compouding period .

As given

Jim opened an account with $400. The account pays 3 percent quarterly. How much is in the account at the end of 2 years .

p = $400

n = 4

t = 2 years

3% is written in the decimal form

`= (3)/(100)`

= 0.03

r = 0.03

Put all the values in the formula

`A = 400(1+(0.03)/(4))^(4* 2)`

`A = 400(1+0.0075)^(8)`

`A = 400(1.0075)^(8)`

A = 400 × 1.0616

A = $424.64

Therefore the money in the account at the end of 2 years is $424.64 .