33.8k views
4 votes
A deposit of $10,000 is made in a trust fund that pays 3.8% interest, compounbed quarterly. It is specified that the balance will be given to Abudu Charity after the money has earned interest for 40years. How much will the charity receive?

User Grahamaj
by
4.8k points

1 Answer

3 votes

9514 1404 393

Answer:

$45,395.39

Explanation:

The formula for an amount earning compound interest is ...

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

where principal P is invested at annual rate r compounded n times per year for t years.

Using the given numbers, we have ...

A = $10,000(1 +0.038/4)^(4·40) ≈ $45,395.39

The charity will receive $45,395.39.

User Stanislav Shamilov
by
4.9k points