Question

Samir and Elizabeth deposit $600.00 into a savings account which earns 1% interestcompounded quarterly. They want to use the money in the account to go on a trip in 2 years.How much will they be able to spend?nt)"Use the formula A = P 1 + , where A is the balance (final amount), P is the principal(starting amount), r is the interest rate expressed as a decimal, n is the number of times peryear that the interest is compounded, and t is the time in years.Round your answer to the nearest cent.$

Answer 1

To determine a compound Interest

The above formular is for solving compound interest

`\begin{gathered} P\text{ = Principal = \$600, A = Amount , r = rate = 1 \% = 0.01 } \\ n\text{ = number of times quartely = }(12)/(4)=3\text{ , t = time in years = 2} \end{gathered}`
`\begin{gathered} A\text{ = P ( 1 + }(r)/(n))^(nt) \\ A\text{ = \$ 600 ( 1 + }(0.01)/(3))^(3x2) \\ A=600(1+0.003)^6 \end{gathered}`
`\begin{gathered} A=600(1.003)^6 \\ A\text{ = 600(1.020167)} \\ A\text{ = 612.1}002 \\ A\text{ = 612.10 (nearest cent)} \end{gathered}`

Hence the compound interest = 612.10 (nearest cent)