Question

Find the final amount of money in an account if $4,700 is deposited at 2.5% interest compounded quarterly (every 3 months) and the money is left for 10 years.

Answer 1

$6030.23

Explanation:

The future value formula is useful for this.

FV = P(1 +r/n)^(nt)

where P is the principal invested, r is the annual rate, n is the number of times per year interest is compounded, and t is the number of years. Filling in the given values, we can do the arithmetic to find the amount.

FV = $4700·(1 + 0.025/4)^(4·10) ≈ $6030.23

The amount in the account will be $6030.23.