Question

A student deposits $500 into an account that earns 3.5% interest compounded quarterly. Describe and correct the students error in calculating the account balance after 2 years.

Answer 1

Answer:

The student didn't convert the interest rate of 3.5% to decimal form. The correct calculations are:

$a = 500(1 \times \frac{0.035}{4} {}) {}^{4 \times 2}$

$= 500(1.00865) {}^{8}$

$536.09$

The student didn't convert the interest rate to decimal form. The correct answer is $536.09.