juan is opening a bank account. He will invest $5000 at 4% interest rate for an undetermined amount of years. What's the equation, define variables.

Question

I need help figuring out the equation with the variables. I forgot how to do this. Please help!

Answer 1

Is the interst compounded annually,

semi-annually, quarterly, or what?

 

Compound interest formula:

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

 

A = future amount

p = principal = 5000

r = interest rate = 0.04

n = # times compounded per year

   = 1 for annually, 2 semi-annual, 4 quarterly ...

t = time in years 

 

Annually:  A = 5000(1.04)^t

Semi-Annual: A = 5000(1+.04/2)^2t

and so forth