Question

A = P(1 + r/n)^nt. A principal of $6000 is invested in an account paying an annual percentage rate of 4%. Find the amount in the account after 5 years if the account is compounded quarterly.

a) $7135.64
b) $7247.67
c) $7321.85
d) $7458.32

Answer 1

The amount in the account after 5 years, compounded quarterly, is approximately $7247.67.

Step-by-step explanation:

To find the amount in the account after 5 years when the account is compounded quarterly, we can use the formula A = P(1 + r/n)^(nt).

Given that the principal (P) is $6000, the annual interest rate (r) is 4%, and the number of compounding periods (n) is 4 (quarterly), we can substitute these values into the formula.

The amount in the account after 5 years will be A = 6000(1 + 0.04/4)^(4*5)

Calculating this expression, we find that A is approximately $7247.67