Explanation:
Cody will have $500 in a fund that gives interest at a rate of 12% per year, compounded quarterly. To calculate the amount he will have in five years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the final amount
P is the principal amount (initial deposit)
r is the annual interest rate (expressed as a decimal)
n is the number of times that interest is compounded per year
t is the number of years
In this case, Cody's initial deposit is $500, the interest rate is 12% (or 0.12 as a decimal), interest is compounded quarterly (n = 4), and the number of years is 5 (t = 5). Plugging these values into the formula, we can calculate the final amount:
A = 500(1 + 0.12/4)^(4*5)
A = 500(1 + 0.03)^20
A = 500(1.03)^20
A ≈ $813.96
Therefore, Cody will have approximately $813.96 in five years.