Question

Suppose that $2000 is invested at a rate of 2.4%, compounded quarterly. Assuming that no withdrawals are made, find the total amount after 5 years.Do not round any intermediate computations, and round your answer to the nearest cent.Х5?

Answer 1

The formula for compoundings made n times per year is:

$A=p\cdot(1+\frac{r}{n})^{nt}$

then start by replacing the data given in the problem and n=4 since the compounding is done quarterly

$\begin{gathered} A=2000\cdot(1+\frac{0.024}{4})^{5\cdot4} \\ A=2000\cdot(1+0.006)^{20} \\ A=2000\cdot(1.006)^{20} \end{gathered}$

solve and round to the nearest cent

$A=2254.1852\cong2254.19$