Question

Mrs. Krohn invested $4000 for 11 years in an account with an interest rate of 2.99% compounded quarterly. How much will be in the account? Round to the nearest cent.

a) $4,977.22
b) $5,200.99
c) $4,523.11
d) $4,000.87

Answer 1

Mrs. Krohn invested $4000 at a 2.99% interest rate compounded quarterly for 11 years. Using the compound interest formula, we calculate the future value to be approximately $5,200.99, which is option b).

Step-by-step explanation:

The question asks how much will be in an account after Mrs. Krohn invested $4000 for 11 years at an interest rate of 2.99% compounded quarterly. To find the future value of the investment, we use the compound interest formula:

Future Value = Principal × (1 + rate/n)nt
Here, the principal is $4000, the rate (r) is 0.0299 (since 2.99% = 0.0299 when converted to a decimal), n is the number of times interest is compounded per year (which is 4 for quarterly), and t is the number of years (11).

Now we calculate:

• Future Value = 4000 × (1 + 0.0299/4)4×11
• Future Value = 4000 × (1 + 0.007475)44
• Future Value = 4000 × (1.007475)44
• Future Value is approximately $5,200.99 after using a calculator

Therefore, the correct answer is $5,200.99, which corresponds to option b).