Question

Determine the accumulated balance after the stated period.$5000 deposit at an APR of 2% with quarterly compounding for5 years

Answer 1

The accumulated balance after the stated period is $5, 524.48

Explanation

Let the initial amount deposited = $5000

Interest rate = 2%

Year = 5 years

Number of periods = 4

The compound interest formula is given as

`\begin{gathered} A\text{ = P ( 1 + }(r)/(n))^{n\cdot\text{ t}} \\ A\text{ = 5000 ( 1 + }(0.02)/(4))^{4\cdot\text{ 5}} \\ A=5000(1+0.005)^(20) \\ A=5000(1.005)^(20) \\ A\text{ = 5000 }\cdot\text{ 1.104895} \\ A\text{ = \$5, 524.48} \end{gathered}`

Hence, the accumulated balance after the stated period is $5, 524.48