Question

Swanton Savings Bank pays 5.5% interest compounded quarterly on a regular savings account. John deposited $4400 in regular savings accounts for 1.5 years. How much interest did he earn?

Answer 1

$375.71

Explanation:

Given that:

Rate of interest = 5.5% compounded quarterly

Time = 1.5 years

Principal amount deposited in savings account = 1.5 years

To find:

Interest earned = ?

Solution:

Formula for amount with interest compounding quarterly:

`A = P(1+(r)/(4* 100))^(4t)`

Putting the values:

`A = 4400(1+(5.5)/(4* 100))^(4* 1.5)\\\Rightarrow 4400* 1.01375^6\\\Rightarrow 4400* 1.085\\\Rightarrow \$ \bold{4775.71}`

Interest earned = Amount - Principal

Interest earned = 4775.70 - 4400 = $375.71