Question

If you took $1,000 and put it into an interest-bearing savings account compounding quarterly at 3%, how much would your fund be worth at the end of one year? A: $1,030.00 B: $1,120.00 C: $1,030.34 D: $1,120.33

Answer 1

your answer should be C $1,030

Answer 2

C. $1030.34

Step-by-step explanation:

Given:

Principal = $1,000

Interest = 3%

Number of Times = Quarterly

Time = 1 year

Interest Type = Compound Interest

Required

Amount at the end of the year

To solve this, I'll make use of Amount formula which is;

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

Using compound interest notations, the given parameters are:

P = $1,000

r = 3%

t = 1

Quarterly means 4 times a year;

So, n = 4

Solving for Amount (A), the formula becomes

`A = \$ 1000(1 + (3\%)/(4))^(4 * 1)`

`A = \$ 1000(1 + (3\%)/(4))^(4)`

Convert percent to decimal

`A = \$ 1000(1 + (0.03)/(4))^(4)`

`A = \$ 1000(1 + 0.0075)^(4)`

Solve the expression in the bracket

`A = \$ 1000(1 .0075)^(4)`

Solve the exponent

`A = \$ 1000 * 1.03033919066`

`A = \$ 1030.33919066`

`A = \$ 1030.34` (Approximated)

Hence, the amount at the end of the year is approximately $1030.34