Question

Anya's grandparents decide they want to invest at the bank. They have $35,000 they are willing to invest for 6 years. If they get a 4% interest rate and compound quarterly, how much can they expect to have in their account at the end of their investment time. Round to the nearest cent (if necessary). Show all work for full credit.​

Answer 1

Compounding quarterly can be considered as the interest amount which is earned quarterly on an account.

At the end of their investment time, $44,440 in his account.

Since, interest is compounded quarterly and In one year, 4 quarter exist.

Number of quarters in 6 years = $6*4=24$

And quarterly rate= $\frac{4}{4} =1$ %

We use below formula,

$Amount = principal(1 + \frac{rate}{100} )^{time}$

$A=35000(1+\frac{1}{100} )^{24}\\\\A=3500(\frac{101}{100} ) ^{24} \\\\Amount=44,440$

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