Question

Liz deposited money into an account in which interest is compounded quarterly at a rate of 3.2%. How much did she deposit if the total amount in her account after 5 years was $4837.65, and she made no other deposits or withdraws. SHOW WORK

Answer 1

She deposited
`4124.998` dollars

Explanation:

Given -

Rate of interest
`= 3.2` %

Rate of interest compounded quarterly

Time period
`= 5` years

Amount after
`5` years
`= 4837.65` dollars

We shall use the following equation for solving this question

`A = P (1 + r)^t`

Where A is the final amount after time period t

P is the principal amount

r is the rate of interest

and t is the time period

Substituting the given values in above equation, we get -

`4837.65 = P (1 +(3.2)/(4*100))^(4 *5)\\4837.65 = P (1 +0.008)^(20)\\P = (4837.65)/(1.7276) \\P = 4124.998`

She deposited
`4124.998` dollars