Answer: Five years later: $5659.11. Two years ago: $3841.64
Explanation:
To solve these questions, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
A = final account balance
P = initial account balance ($4000)
r = annual interest rate (7% = 0.07)
n = number of times the interest is compounded annually ("quarterly" = 4)
t = number of years interest is compounded (5 and -2)
Let's plug in the numbers for five years later:
A = P(1 + r/n)^(nt)
A = 4000(1 + 0.07/4)^(4*5)
A ≈ $5659.11
And for two years ago:
A = P(1 + r/n)^(nt)
A = 4000(1 + 0.07/4)^(4*-2)
A ≈ $3481.64