Question

Solve these compound interest problems and round your answer to the nearest 100th.

1) Find the final amount for a $1200 investment at 2.5% interest compounded quarterly for 10 years.

Answer 1

$1,539.63

Explanation:

You are going to want to use the compound interest formula, which is shown below.

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

P = initial balance

r = interest rate

n = number of times compounded annually

t = time

First, change 2.5% into its decimal form:

2.5% ->
`(2.5)/(100)` -> 0.025

Next, plug in the values into the equation:

`A=1,200(1+(0.025)/(4))^(10(4))`

`A=1,539.63`

The answer is $1,539.63

Answer 2

1,539.63

Explanation: