Question

Angel has $520 in his savings account. Angel considers investing the money for 5 years with a bank. The bank offers an annual interest rate of 1.2% compounded quarterly. What will be the value of Angel's investment after 5 years?

Answer 1

To find the value of Angel's investment after 5 years, we can use the compound interest formula. Angel's investment after 5 years will be approximately $552.41.

Step-by-step explanation:

To find the value of Angel's investment after 5 years, we can use the compound interest formula:

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

Where:

• A = the final amount
• P = the principal amount (initial investment)
• r = annual interest rate (in decimal)
• n = number of times interest is compounded per year
• t = number of years

In this case, Angel has $520, an annual interest rate of 1.2%, and interest is compounded quarterly. Plugging the values into the formula:

A = 520(1 + 0.012/4)^(4*5)

Simplifying the expression:

A = 520(1 + 0.003)^(20)

Calculating the value using a calculator:

A = 520(1.003)^20 ~ $552.41

Therefore, the value of Angel's investment after 5 years will be approximately $552.41.