Question

If you deposit $600 into an account which earns 4% yearly interest compounded quarterly, how much will be in the accountafter 7 years, assuming you never withdraw money from the account? Round your answer to the nearest cent if necessaryand do not include the dollar sign.

Answer 1

In order to find the total amount of money in the account, we can use the formula:

`P=P_0(1+(r)/(n))^(nt)_{}`

Where P is the final value, Po is the initial value, r is the rate, t is the time and n depends on the period the interest is compounded.

In this case, we have Po = 600, r = 0.04, t = 7 and n = 4 (because the interest is compounded quarterly), so we have:

`\begin{gathered} P=600(1+(0.04)/(4))^(4\cdot7) \\ P=600(1+0.01)^(28) \\ P=600(1.01)^(28) \\ P=600\cdot1.32129=792.77458 \end{gathered}`

Rouding to the nearest cent, we have an amount of 792.77