Question

julio invests 5360 in a retirement account with a fixed annual interest rate of 4% compounded 4 times per year. What will the account balance be after 17 years?

Answer 1

To find the account balance after 17 years, we need to first calculate the annual interest rate. Since the interest is compounded 4 times per year, the effective annual interest rate is equal to (1 + 0.04/4)^4 - 1, which is about 4.169%.

To find the account balance after 17 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years. Plugging in the values we know, we get:

A = 5360(1 + 0.04169/4)^(4*17)

A = $9,907.35

So the account balance after 17 years will be about $9,907.35.