Question

Use the appropriate compound interest formula to compute the balance in the account after the stated period of time

​$11, 000 is invested for 5 years with an APR of ​3% and quarterly compounding.

The balance in the account after 5 years is?

Answer 1

$12,773.03

Explanation:

In order to calculate the balance in the account, we have to use the formula for compound interest:

`\boxed{A = P(1+(r)/(n))^(nt)}`

where:

• A = final amount

• P = principal amount = $11,000

• r = APR in decimal = 3% = 0.03

• n = number of compounding periods per year = 4

• t = number of years = 5

Using the above formula and information, we can calculate the balance in the account:

A =
`11000(1+(0.03)/(4))^(4 * 5)`

=
`11000(1.0075)^(20)`

=
`\bf 12773.03`

Therefore, the amount in the account after 5 years is $12,773.03.