Question

Zech deposited $5,600 in an account, which compounded 1.9 percent quarterly, and left it there for 10 years. What was the amount in the account at the end of 10 years? Round to the nearest dollar.

Answer 1

$6769

Explanation:

To calculate the amount, we make use of the compound interest formula

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

where A is the amount which we are to calculate

P is the amount deposited which is $5,600

r is the rate which is 1.9% or 1.9/100 = 0.019

t is the number of years = 10

n is the number of times the interest is compounded per year which is 4(quarterly means every 3 months and there are 4 quarters in a year)

Plugging all these values, we have

A = 5,600(1+ 0.019/4)^40

A = 5,600( 1 + 0.00475)^40

A = 5,600(1.00475)^40

A = $6768.75

Which is $6769 to the nearest dollars