Question

Suppose that when your friend was​ born, your​ friend's parents deposited ​$5000 in an account paying

5.2% interest compounded
quarterly. What will the account balance be after
14years?

Answer 1

$10,306.21

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 5.2% into a decimal:

5.2% ->
`(5.2)/(100)` -> 0.052

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

`A=5,000(1+(0.052)/(4))^(4(14))`

`A=10,306.21`

The account balance will be $10,306.21