Question

Jason's savings account has a balance of $2179. After 5 years, what will the amount of interest be at 6% compounded quarterly?

a.
$760.80
c.
$755.80
b.
$65.37
d.
$746.80

Answer 1

Jason's savings account has a balance of $2179. After 5 years, what will the amount of interest be at 6% compounded quarterly?
C. $755.80

Answer 2

The amount of the interest is $755.80 .

Option (c) is correct .

Explanation:

Formula

`Amount = P (1 + (r)/(4))^(4t)`

Amount = Principle + Interest

Where P is the principle , r is the rate of interest in the decimal form and t is the time in years .

As given

Jason's savings account has a balance of $2179 .

The account is compounded quarterly at the rate of 6% for 5 years .

P = $2179

6% is written in the decimal form

`= (6)/(100)`

= 0.06

r = 0.06

t = 5 years

Put all the values in the formula

`Amount = 2179(1 + (0.06)/(4))^(4* 5)`

`Amount = 2179(1 +0.015)^(20)`

`Amount = 2179(1.015)^(20)`

`Amount = 2179* 1.34686`

Amount = $ 2934.80 (Approx)

Thus

$2934.80 = $2179 + Interest

Interest = $2934.80 - $2179

Interest = $ 755.80

Therefore the amount of the interest is $755.80 .

Option (c) is correct .