Question

The principal represents an amount of money deposited in a savings account subject to compound interest of a given rate.How much money there will be in the account after the given number of years. The principal is$5000, 5% Rate, quarterlybover a two year period.

Answer 1

$5522.43

Explanation:

The amount in an account for a principal P saved at compound interest for a duration of n years compounded with period k at an annual interest rate of r% is calculated using the formula:

`A(n)=P(1+(r)/(k))^(nk)`

In this case:

• Principal, P=$5000
• Interest Rate, r=5%=0.05
• Time, n=2 years
• Period, k=4(Quarterly)

Therefore, the amount is:

`A(n)=5000(1+(0.05)/(4))^(4*2)\\=5000(1+0.0125)^(8)\\=5000(1.0125)^(8)\\=\$5522.43`

The amount of money in the account at the end of the two years is $5522.43.