Question

Calculate the compound amount when $9000 is deposited in an account earning 9% interest, compounded quarterly, for 8 years. (Round your answer to two decimal places.)

Answer 1

Solution

For this case we can use the following formula:

$A=P(1+\frac{r}{n})^{nt}$

where A= future value

P= 9000, r= 0.09, t= 8yr

n= 4 (since the interest is compounded quarterly)

Then if we replace we got:

$A=9000(1+\frac{0.09}{4})^{4\cdot8}=18342.93$

then the amount rounded would be 18342.93