Question

If Ian decides to deposit $3,000 in an investment account that pays for the next 5 years and is compounded quarterly at 12%, how much will he have at the end of the five years?

Answer 1

Ian will have approximately $4,790.77 at the end of five years.

Step-by-step explanation:

To calculate the amount Ian will have at the end of five years, we can use the compound interest formula:

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

Where:

• A = the final amount
• P = the initial principal ($3,000)
• r = the annual interest rate (12% or 0.12)
• n = the number of times the interest is compounded per year (quarterly, so 4)
• t = the number of years (5)

Plugging in the values, we get:

A = 3000(1 + 0.12/4)^(4*5)

Simplifying this gives us:

A = 3000(1 + 0.03)^20

Using a calculator, we find that Ian will have approximately $4,790.77 at the end of five years.