Question

You deposit $100 into a savings account that gives you 5.5% annual interest rate, compounded quarterly. What will be your balance after 4 years?

Answer 1

$124.42.

Explanation:

Given data

Principqp= $100

Rate= 5.5%

time=4 years

First, convert R as a percent to r as a decimal

r = R/100

r = 5.5/100

r = 0.055 rate per year,

Then solve the equation for A

A = P(1 + r/n)^nt // Since we are compounding quarterly

A = 100.00(1 + 0.055/4)(^4)(4)

A = 100.00(1 + 0.01375)^(16)

A = $124.42

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $100.00 at a rate of 5.5% per year compounded 4 times per year over 4 years is $124.42.