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You deposit $5000 in an account earning 2.0% interest compounded quarterly. How much interest will you earn over 12 years? Round your answer to the nearest cent.​

User Schweder
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1 Answer

10 votes
10 votes

Answer:

The future value of P at interest rate r compounded n times per year for t years is ...

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

4000 = P(1 +.08/4)^(4·10)

P = 4000·1.02^-40 ≈ 1811.56

$1811.56 must be deposited now in order to have $4000 in 10 years.

Explanation:

User Stefano Cremona
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