Precalculus Rounding

Question

If  $1300 is invested at an interest rate of 6.75% per year, compounded quarterly, find the value of the investment after the given number of years. (Round your answers to the nearest cent.)

(a) 1 year

$ 

(b) 2 years

$ 

(c) 10 years

$ 

Answer 1

FV = 1300(1+.075/4)^(4t)

where t = number of years

a) t = 1, FV = 1300(19/16)^4== $1390.00

b) t =2 FV = 1300(19/16)^8 =$1486.22

c) t 10 FV = 1300(19/16)^40=$2,538.90

rounded to nearest cent

Answer 2

The formula for compounding quarterly = A = P(1 + r/t)^nt

A is the amount after interest.

P is the initial investment

r is the yearly interest rate expressed as a number (divide by 100)

n is the number of compounding terms in the year

t is the number of years.

A A = 1300(1+.0675/4)^4 = about 1389.996265 = about 1390.00

B A = 1300(1+.0675/4)^8 = about 1486.22

C A = 1300(1+.0675/4)^40 = about 2538.90