Question

Use the formula a=p(1 rn)nt to find the amount in a compound interest account after t years, compounded n times a year. mary deposited $5,600 in an account, which compounded 1.9 percent quarterly, and left it there for 10 years. what was the amount in the account at the end of 10 years? round to the nearest dollar. $7,120 $6,769 $6,026 $5,872

Answer 1

(b) $6,769

Explanation:

The value in the account can be found by using the compound interest formula:

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

where P is the principal invested, r is the annual rate, n is the number of times per year interest is compounded, and t is the number of years.

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apply formula

Using the given values in the formula, we have ...

P = 5600, r = 0.019, n = 4, t = 10

A = 5600(1 +0.019/4)^(4·10) = 5600×1.00475^40 ≈ 6768.752

The amount in the account at the end of 10 years was about $6,769.

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Additional comment

Any number of spreadsheets, calculators, or apps can find the future value (FV) for you. The attachment shows the use of a TI-84 calculator work-alike.