Question

use the formula for computing future value using compound interest to determine the value of an account at the end of 4 years if a principal amount of $11,000 is deposited in an account at an annual interest rate of 5% and the interest is compounded quarterly. the amount after 4 years will be $______ (round to the nearest cent as needed)

Answer 1

From the question;

We are given the following

Principal amount = $11,000

number of years = 4

interest rate = 5%

compounded quarterly

we are to find the future value using compound interest formula.

The formula is given as

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

Where

A = Amount

P = $11,000

r = 5%

n = compounded 4 times a year

t = 4 years

Therefore we have

`A=11,000(1+(0.05)/(4))^(4*4)`

By simplifying furthe we get

`\begin{gathered} A=11,000(1+0.0125)^(16) \\ A=11,000(1.0125)^(16) \\ A=\text{ \$13,418.785} \end{gathered}`

Therefore, the amount after 4 years will be $13,418.79