Ask Question
14 March, 15:49

Stephen invests $2,000 in a savings account paying 6% annual interest. Find the balance after 5 years if the interest is compounded quarterly.

+1
Answers (1)
  1. 14 March, 17:16
    0
    The balance of Stephen's savings account after 5 years is US$ 2,693.71

    Step-by-step explanation:

    1. Let's review the data given to us for solving the question:

    Investment = US$ 2,000

    Annual interest rate = 6% compounded quarterly = 1.5% per quarter

    Duration of the investment = 5 years = 20 quarters

    2. Let's find the future value of this investment after 5 years or 20 quarters, using the following formula:

    FV = PV * (1 + r) ⁿ

    PV = Investment = US$ 2,000

    rate (r) = 1.5% = 0.015

    number of periods (n) = 20

    Replacing with the real values, we have:

    FV = 2,000 * (1 + 0.015) ²⁰

    FV = 2,000 * 1.015 ²⁰

    FV = 2,000 * 1.34685501

    FV = US$ 2,693.71
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Stephen invests $2,000 in a savings account paying 6% annual interest. Find the balance after 5 years if the interest is compounded ...” in 📙 Mathematics if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers