Question

Suppose you deposit a principal amount of p dollars in a bank account that pays

compound interest. If the annual interest rate r (expressed as a decimal) and the bank
makes interest payments n times every year, the amount of money A you would have
after t years is given by:
A = P[1+ (r/n)]"
Find the account balance after 20 years if you started with a deposit of $1000, and the
bank was paying 4% interest compounded quarterly (4 times a year). Round your
answer to the nearest cent.
Answer:

Answer 1

$2216.72

Explanation:

Simply plug in your known variables into the formula:

a = 1000

r = 0.04 (4%)

n = 4

t = 20

A = 1000(1 + 0.04/4)⁴⁽²⁰⁾

A = 1000(1 + 0.01)⁸⁰

A = 1000(1.01)⁸⁰

A = 1000(2.21672)

A = 2216.72