Question

clare puts $400.00 into an account to use school expenses. the account earns 8 % interest compounded quarterly. how much will be in the account after 9 years

Answer 1

This is compound interest problem. The compound interest formula is:

`F=P(1+r)^t`

Where

F is the future amount [we want this, after 9 years]

P is the initial amount [$400, in our case]

r is the rate of interest per period [8% per year. Since per quarter compounding, we want interest rate per quarter, so, 8%/4 = 2%. In decimal, 2/100 = 0.02]

t is the time period [number of compoundings in 9 year would be 9*4 = 36]

We now know the given information, we simply substitute it into the formula and solve for F. Shown below:

`\begin{gathered} F=P(1+r)^t \\ F=400(1+0.02)^(36) \\ F=400(1.02)^(36) \\ F=815.95 \end{gathered}`

The account will be worth $815.95 after 9 years!