Question

Using the formulas, answer the question.

A = P(1 + =)nt
A = Pert
Ted invests $500 in an account that compounds interest quarterly with a 3.5%
rate. How much money will he have after 15 years? Round to the nearest
dollar.

Answer 1

First, convert R as a percent to r as a decimal

r = R/100

r = 3.5/100

r = 0.035 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 500.00(1 + 0.035/4)(4)(15)

A = 500.00(1 + 0.00875)(60)

A = $843.30

A = $843 (round-off)