Question

Valley Savings and Trust pays 5% interest compounded quarterly on regular savings accounts. Leland Davis deposited $2,000 in a regular savings account. He made no other deposits or withdrawals during the interest period. What is the amount in the account after 1½ years?
120 points
1,873.25
3,114.25
2,154.76
2,720.36

Answer 1

Answer:

2,154.76

Explanation:

The formula for calculating compound interest as a below

FV = PV × (1+r)^n

For Leland Davis

Fv= amount after one and half years

Pv =$2000

r =5% but interest is compounded quarterly so r = 5%/4

n =one and half years = 1.5 x 4 quarters

Fv=$2000 x ( 1+1.25/100)^6

Fv=$2000 x (1.0125)^6

Fv=2000 x1.07738

Fv= 2154.76