Question

Albert and Kelsey desposit 1,000.00 into a savings account which 13%interest compounded quarterly they want to use the money in the account to go on a trip in 2 years how much will they be able to spend

Answer 1

Given Data:

The initial amount is, P = 1000

The rate of interest is, r = 13% = 0.13

The compounding is done quarterly, so n = 4

The duration is, t = 2

Applying the formula to calculate compound interest, we have,

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=1000(1+\frac{0.13}{4})^8=1291.577 \end{gathered}$

Thus, they will be able to spend 1291.577 after two years.