Question

You deposit $5000 in an account earning 8% interest compounded quarterly. How much will you have in the account in 5 years? Round your answer to the nearest cent.

Answer 1

You wil have $7429.73 in the account in 5 years

How much will you have in the account in 5 years?

From the question, we have the following parameters that can be used in our computation:

Principal, P = $5000

Rate = 8%

Time = 5 years

To calculate the future value of an investment with compound interest, you can use the formula:

`A = P * (1 + \frac rn)^{nt`

It is compounded quarterly, so four times a year

This means that

n = 4

Substitute the known values into the equation

`A = 5000 * (1 + \frac {0.08}{4})^{4 * 5`

Evaluate

A = 7429.73

Hence, you wil have $7429.73 in the account in 5 years