Walter's savings account has a balance of $273. After 5 years, what will the amount of interest be at 5% compounded quarterly?

Question

Mathematics

Nyla Fleming

13 March, 23:26

Walter's savings account has a balance of $273. After 5 years, what will the amount of interest be at 5% compounded quarterly?

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Answers (1)

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Eric Cowan · Answer 1

Given:

Principal = $273

Interest rate = 5% compounded quarterly

time = 5 years

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

A = amount of money accumulated plus interest

P = principal

r = interest rate (in decimal form)

n = number of times the interest is compounded per year

t = total number of years the amount is deposited

A = $273 (1 + 0.05/4) ⁴*⁵

A = $273 (1 + 0.0125) ²⁰

A = $273 (1.0125) ²⁰

A = $273 * 1.2820

A = $349.99

$349.99 - 273 = $76.99

The compounded interest amounts to $76.99