Question

Question 2niUse the compound interest formulas A = P(1+P(1+)and A Per to solve. Find the accumulatedvalue of an investment of $5000 at 10% compounded quarterly for 5 years

Answer 1

On simplifIt is given that,

$\begin{gathered} P\text{ = \ 5000} \\ r\text{ = 10\%} \\ t\text{ = 5 years} \end{gathered}$

The formula for amount is given as,

$A\text{ = P\lparen1+}\frac{R}{n})^{nt}$

Amount is calculated as,

$A\text{ = 5000}\times\text{ \lparen1+}\frac{0.1}{4})^{20}$

On simplifying further,

$\begin{gathered} A\text{ = 5000 }\times\text{ \lparen1.025\rparen}^{20} \\ A\text{ = 5000 }\times\text{ 1.6386} \\ A\text{ = 8193} \end{gathered}$

Thus the amount is $ 8193.