Question

Write a compound interest function to model the following situation. Then, find the balance after the given number of years.

$19,600 invested at a rate of 3.5% compounded quarterly; 5 years
Group of answer choices

Answer 1

$23,330.66

Explanation:

The compound interest function is ...

FV = P(1 +r/n)^(nt)

where P is the principal amount ($19,600), n is the number of compoundings per year (4), r is the interest rate (.035), and t is the number of years (5).

Putting these numbers into the formula and doing the arithmetic, we get ...

FV = $19,600(1 +.035/4)^(4·5) = $23,330.66