Question

A student deposits $500 into an account that earns 3.5% interest compounded quarterly. Describe and correct the students error in calculating the account balance after 2 years.

Answer 1

The student didn't convert the interest rate of 3.5% to decimal form. The correct calculations are:

`a = 500(1 * (0.035)/(4) {}) {}^(4 * 2)`

`= 500(1.00865) {}^(8)`

`536.09`

The student didn't convert the interest rate to decimal form. The correct answer is $536.09.