76.4k views
17 votes
Rick's savings account has a balance of $5000. If he does not make a

withdrawal or deposit, how much money will be in Rick's account if it pays an
annual interest rate of 6% for 8 years compounded quarterly?

2 Answers

13 votes

Rate of interest

  • 0.06/4=0.015

So

Compound ineterest formula to be used

  • A=P(1+r)^t
  • A=5000(1+0.015)⁴×⁸
  • A=5000(1.015)³²
  • A=$8051.6
User Brian Berns
by
4.1k points
5 votes

Answer:

$8,051.62

Explanation:

Compound interest formula


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

where:

  • A = final amount
  • P = principal
  • r = interest rate (in decimal form)
  • n = number of times interest applied per time period
  • t = number of time periods elapsed

Given:

  • P = $5000
  • r = 6% = 0.06
  • n = 4
  • t = 8

Substituting given values into the formula:


\implies \sf A=5000(1+(0.06)/(4))^(4 * 8)


\implies \sf A=5000(1.015)^(32)


\implies \sf A=8051.62\:(nearest\:hundredth)

User Dana Woodman
by
3.4k points