Question

$620 is invested in an account earning 2.5% interest (APR), compounded quarterly. Write a function showing the value of the account after t t years, where the annual growth rate can be found from a constant in the function. Round all coefficients in the function to four decimal places. Also, determine the percentage of growth per year (APY), to the nearest hundredth of a percent.

Answer 1

Kindly check explanation

Explanation:

Given the following :

Principal (P) = $620

Annual percentage rate (r) = 2.5% ; compounded quarterly = 2.5% / 4 = 0.025 / 4 = 0.0063

Period = t

Expression for value of account(A) :

A = P(1 + r)^t*4

A = 620(1 + 0.0063)^4t

Hence, the annual growth percentage can be found thus :

( 1 + r)^4 - 1 ; since compounding occoyrs 4 times a year

[(1 + 0.0063)^4] - 1

1.0063^4 - 1

= 1.0254391417632961 - 1

= 0.0254