Question

Suppose that $2000 is invested at a rate of 2.4%, compounded quarterly. Assuming that no withdrawals are made, find the total amount after 5 years.Do not round any intermediate computations, and round your answer to the nearest cent.Х5?

Answer 1

The formula for compoundings made n times per year is:

`A=p\cdot(1+(r)/(n))^(nt)`

then start by replacing the data given in the problem and n=4 since the compounding is done quarterly

`\begin{gathered} A=2000\cdot(1+(0.024)/(4))^(5\cdot4) \\ A=2000\cdot(1+0.006)^(20) \\ A=2000\cdot(1.006)^(20) \end{gathered}`

solve and round to the nearest cent

`A=2254.1852\cong2254.19`