Question

A deposit of $1000 is made in a bank account that pays 24% interest per year compounded quarterly. Approximately how much money will be in the account after 10 years

Answer 1

$10,285.72

Step-by-step explanation:

In this scenario, we can use the compound interest formula to calculate the total after 10 years. The formula is the A = P *
`(1 + r/n)^(nt)`

where,

A = final value after interest

P = initial investment amount

r = annual interest rate in decimal form

n = number of time the interest is compounded based on t

t = total amount of time

In this case, the interest is compounded quarterly meaning 4 times a year, therefore we can plug all the values into the formula and solve for A

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

A = 1000 *
`(1 + 0.24/4)^(4*10)`

A = 1000 *
`(1.06)^(40)`

A = 1000 * 10.2857

A = 10,285.72

Therefore after 10 years the account will have a total of $10,285.72