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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.

1 Answer

4 votes

Answer:

$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.

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