Question

Suppose that $1200 is invested at 612%, compounded quarterly. How much is in the account at the end of 5 years?
Round your answer to the nearest cent.
Do NOT round until you calculate the final answer.
Do not include the dollar sign.

Answer 1

Answer:

$\ 1,656.50$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=5\ years\\ P=\ 1,200\\ r=6\frac{1}{2}\%=6.5\%=6.5/100=0.065\\n=4$  

substitute in the formula above

$A=1,200(1+\frac{0.065}{4})^{4*5}$  

$A=1,200(1.01625)^{20}$  

$A=\ 1,656.50$  

Answer 2

Answer:

1,656.50

Step-by-step explanation:

Here, the principal is P=$1200, the interest rate is r=612%=0.065, and because the interest is compounded quarterly, n=4. The investment is modeled by the following,

A(t)=1200(1+0.0654)(4)t

To determine the amount in the account after 5 years evaluate A(5) and round to the nearest cent.

A(5)===1200(1+0.0654)4(5)1200(1.01625)201656.50

The CD will be worth $1,656.50 at the end of the 5-year term.