Question

You deposit $1800 into a bank account that pays 5% annual interest. Find the balance after 7 years if the interest is compounded quarterly. Round to the nearest cent

Answer 1

Answer:

The balance after 7 years would be $2,548.79

Step-by-step explanation:

We are given the following in the question:

P = $1800

r = 5% = 0.05

t = 7 years

The compound interest is given by:

$A = p\bigg(1+\dfrac{r}{n}\bigg)^{nt}$

where A is the amount, p is the principal, r is the interest rate, t is the time in years and n is the nature of compound interest.

When compounded quarterly, n = 4

Putting values, we get,

$A = 1800\bigg(1+\dfrac{0.05}{4}\bigg)^{28}\\\\A = \ 2,548.79$

Thus, the balance after 7 years would be $2,548.79