Question

leo invests 3500 into an account with a 5.2% interest rate that is compounded quarterly. how much will he have in the account at the end of eight years? round to the nearest penny. fv pv i n t

Answer 1

$Amount in account in 8 years = $5291.40

Explanation:

The compound interest formula is

`A(t)=P(1+r/n)^n^t`, where

• A(t) is the amount,
• P is the principal (amount invested),
• r is the interest rate (converted to a decimal),
• n is the number of compounding periods,
• and t is the time in years

We know from the problem that:

• P = $3500
• r = 0.052
• n = 4 (compound interest is always out of a year and quarterly implies 4)
• t = 8

Now, we can simply plug everything into the problem and round to the nearest penny (hundredths place)

`A(8)=3500(1+0.052/4)^(^4^*^8^)\\A(8)=3500(1.013)^3^2\\A(8)=5291.39638\\A(8)=5291.40`