Elton opened a compound interest savings account with $5500 in principal and an interest rate of 2.8%. If interest is compounded quarterly, how much is in the account after 4 years?

interest compounded quarterly: A = P (1 + r/4) 4t

A.

$6149.42

B.

$6142.36

C.

$649.42

D.

$642.36

Since it's paid quarterly, then the yearly interest of 2.8% should be divided by 4.

Since the payment is I/4th of the year, then the number of payment will 4 times more:

A = P (1+i) ⁿ, and for a period of 4, A = P (1+i/4) ⁴ⁿ

A=5500 (1+0.028/4) ⁴ˣ⁴ = 5500 (1+0.028/4) ¹⁶ = $6149.42 (answer A)