Question

Chandler opened a savings account and deposited $400.00 as principal. The account earns 14% nterest, compounded quarterly. What is the balance after 7 years? nt n 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 per year that the interest is compounded, and t is the time in years. Round your answer to the nearest cent.

Answer 1

Chandler opened a savings account and deposited $400

The interest rate is 14%

The amount deposited is compounded quarterly

time = 7 years

Using the below compound interest formula

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

P = principcal, which is the amount deposited

The rate is in %, Hence, 14% is

14/100 = 0.14

r= 0.14

n = 4. It is 4 because the amount deposited is compounded quarterly

A = 400(1 + 0.14/4)^7 x 4

A = 400( 1 + 0.035)^28

A = 400( 1.035)^28

A = 400 (2.620)

A = 400 x 2.620

A = $1, 048

The balance after 7 years is $1,048