Question

Mandy opened a savings account and deposited $100.00 as principal. The account carns 15% Interest, compounded quarterly. How much interest will she earn after 5 years? Round your answer to the nearest cent

Answer 1

Apply compound interest formula:

A = P (1 + r/n) ^ nt

Where:

A = amount after the interest

P = Principal amount invested

r= interest rate in decimal form = 15/100 = 0.15

t= time

n= number of times interest is compounded per unit t

Replacing:

A = 100 (1 + 0.15/4)^5(4)

A = 100 (1+0.0375)^20 = $208.82

208.81-100 = $108.82