Question

Louis deposited $15,000 into his bank account 33 years ago. The bank offered a per annum interest of 2.9% compounded quarterly. After 1 year, he withdrew $5,000 from his account. He did not make any other withdrawal afterwards. How much money does he have now in his bank account? POSSIBLE POINTS: Give your answer correct to 2 decimal places. 1 2 3 4 5 6​

Answer 1

$11,060.85

Explanation:

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

He deposited $15,000 for 1 year at 2.9% interest compounded quarterly.

F = 15,000(1 + 0.029/4)^(4 × 1)

F = 15,439.75

After 1 year, he had a total of $15,439.75.

Then, he withdrew $5,000.

$15,439.75 - $5,000 = $10,439.75

At the end of the first year, after the withdrawal, he had $10,439.75.

Now, $10,439.75 is in the account for another 2 years at 2.9% interest compounded quarterly.

F = 10,439.75(1 + 0.029/4)^(4 × 2)

F = 11,060.85

Answer: $11,060.85