Question

22. Find the balance in an account with $900 earning 6.5% compounded
quarterly after 4 years

Answer 1

$1,164.80

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, we need to change 6.5% into a decimal:

6.5% ->
`(6.5)/(100)` -> 0.065

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

`A=900(1+(0.065)/(4))^(4(4))`

`A=1,164.80`

The balance after 4 years will be $1,164.80