Question

Hannah invested $4000 in a savings account that that earned 2% interest compounded quarterly. she determined that if she does not withdraw or deposit any more money, the value of the account at the end of 3 years will be $4244.83.what error did Hannah make in her calculations? what will her account balance be after 3 years

Answer 1

Her account balance after 3 years is $4,246.71

Explanation:

In this question, we are tasked with calculating what Hannah's account balance will be after 3 years and the error she made in her calculations

Mathematically, to calculate the account balance after 3 years, we use the formula for the compound interest as follows.

Mathematically, the amount A earned on a compound interest is calculated as

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

where A is the account balance after the number of years which is what we want to know

P is the initial amount invested which is $4000

r is the interest rate which is 2%(2/100 = 0.02) according to the question

n is the number of times interest is compounded per year which is 4(quarterly means every 3 months)

t is the number of years which is 3

We plug the values into the question;

A = 4000(1 + 0.02/4)^(3)(4)

A = 4000(1+0.005)^12

A = 4000(1.005)^12

A = $4,246.71

P.S ; I do not see Hannah's calculation and as such I cannot spot where she made the error in her calculations