Question

Tim invest $5,000 in an account with a bank that offers an annual interest rate of 5%, compounded quarterly. Write the function that models the growth of a deposit of $5,000.

A(t)= __(__+(__\__)) ^__t

Answer 1

9514 1404 393

Answer:

A(t) = 5000(1 +.05/4)^(4t)

Explanation:

The compound interest formula is ...

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

where principal P earns interest at annual rate r compounded n times per year for t years. The problem statement tells you P=5000, r=0.05, n=4. Putting these values into the formula gives ...

A(t) = 5000(1 +0.05/4)^(4t)