Question

A total of $12,000 is invested at an annual interest rate of 9%. Find the balance

after 5 years if it is compounded quarterly.

Answer 1

$18,726.11

Explanation:

Lets use the compound interest formula provided to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First lets change 9% into a decimal:

9% ->
`(9)/(100)` -> 0.09

Since the interest is compounded quarterly, we will use 4 for n. Lets plug in the values now:

`A=12,000(1+(0.09)/(4))^(4(5))`

`A=18,726.11`

The balance after 5 years is $18,726.11