Question

Yvette invests $300 each quarter in a fixed-interest mutual fund paying annual

interest of 7% compounded quarterly. How much will her account have in it at
the end of 11 years?

Answer 1

Explanation:

The formula for calculating the amount after t years is expressed as;

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

P is the Principal (amount invested) = $300

r is the rate = 7% = 0.07

t is the time used to save = 11 years

n is time of compounding = 1/4 (quarterly)

Substitute;

A = 300 (1+0.07/(1/4))^(1/4)(11)

A = 300(1+4(0.07))^2.75

A = 300(1+0.28)^2.75

A = 300(1.28)^2.75

A = 300(1.9716)

A = 591.49

Hence the amount that will be in her account after 11 years is $591.49