Question

Stephanie

invests $6,688 in a savings
account with a fixed annual interest rate of
2% compounded 6 times per year. What
will the account balance be after 5 years?

Answer 1

$7,390.15

Explanation:

A = $7,390.15

A = P + I where

P (principal) = $6,688.00

I (interest) = $702.15

First, convert R as a percent to r as a decimal

r = R/100

r = 2/100

r = 0.02 rate per year,

Then solve the equation for A

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

A = 6,688.00(1 + 0.02/6)^(6)(5)

A = 6,688.00(1 + 0.0033333333333333)^(30)

A = $7,390.15

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $6,688.00 at a rate of 2% per year compounded 6 times per year over 5 years is $7,390.15.