How much money will there be in an account at the end of 5 years if ​$7000 is deposited at 6 ​% interest compounded quarterly question mark ​(Assume no withdrawals are​ made.)

Answer 1

Hello Dylan, the formula for compound interest is:

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

where:

A = final amount

P = principal (initial amount deposited)

r = interest rate as a DECIMAL

n = how many times per YEAR are you compounding: if compounding monthly, n = 12, etc.

t = length of investment in years.

The problem tells you:

P = $7,000

r = 6% = 0.06

n = 4 because the money is compounded QUARTERLY

t = 5 years

So to find A: A = 7000(1 + (0.06/4) )²⁰

You would type it in your calculator and get the answer.