Question

Lucy makes deposits of $240 into an account with an APR of 4.7 at regular intervals 4 times a year. If the starting balance was zero dollars, what is the account balance after 9 years?

Option 1: $11,520
Option 2: $12,960
Option 3: $13,440
Option 4: $14,880

Answer 1

The account balance after 9 years is approximately $13,438.76.

Step-by-step explanation:

To find the account balance after 9 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the ending balance, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, the principal amount is $0, the annual interest rate is 4.7%, interest is compounded 4 times a year, and the number of years is 9. We can substitute these values into the formula:

A = 0(1 + 0.047/4)^(4*9)

A = 240(1 + 0.01175)^36

A ≈ 240(1.01175)^36

A ≈ $13,438.76

Therefore, the account balance after 9 years is approximately $13,438.76.