Question

Your friend deposits $6000 in an investment account that earns 7.3% annual interest. Find the balance after 18 years when the interest is compounded quarterly.

Answer 1

Answer: $22,063.2

Explanation:

quarterly means that 4 times per year this interest, the balance can be find by the equation:

A = P*(1 + r/4)^(4*t)

Where P is the initial value, r is the rate of increase (7.3% in this case, but remember that you must use the decimal form; 0.073) and t is the number of years:

so we have:

B = $6,000*( (1 + 0.073/4)^(4*18) = $22,063.2