Question

Tony wants to put $318,000 in his retirement savings account. It earns an interest rate of 7.1% compounded quarterly. He wants to determine how much he will have in the account after 5 years, even if he makes no additional contributions or withdrawals to the account

A. $448099.52
B. $347242.34
C. $452115.44
D. $341186.28
which answer correct

Answer 1

C. $452115.44

Explanation:

To solve this, we will follow the steps below;

first write down the formula for compound interest

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

where A is the ending amount

P represent the principal

r represent the interest rate

n represent the number of compounding a year

t represent the time {in years)

from he question above

p= $318 000

r = 0.071

n = 4 since is quarterly

t= 5

we can now proceed to insert the values into the formula

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

=318 000 [1+
`(0.071)/(4)`] ^4(5)

= $318 000 [1+
`(0.071)/(4)`] ^20

=$318 000 [1+0.01775] ^20

= $318 000 [1.01775] ^20

=$318 000× 1.421747

≈$452 115.44

He will have $452 115.44 in the account