Question

find the final amount of money in an account if $3,100 is deposited at 2.5% interest compounded quarterly and the money is left for 5 years

Answer 1

Given -

Money deposited in an account = $3,100

Interest rate = 2.5% compounded quarterly

Time = 5 years

To Find -

The final amount of money =?

Step-by-Step Explanation -

As we know there are 4 quarters in a year.

So,

In five years, there are 20 quarters.

On applying the formula:

Final Amount =

$\begin{gathered} =\text{ }P\times(1+i)^n \\ \\ =\text{ 3100 }\times(1+\text{ 0.025/4})^{20} \\ \\ =\text{ 3100}\times(1\text{ + 0.00625})^{20} \\ \\ =\text{ 3100}\times(1.00625)^{20} \\ \\ =\text{ 3100}\times1.1327 \\ \\ =\text{ 3511.3939} \end{gathered}$

Final Answer -

The final amount of money = $3511.4