Question

Robyn invests $1500 at 4.85% compounded quarterly. Write an equation to represent the amount of money A she will have in tyears.

Answer 1

The amount of money A after t years, with a rate r, an initial investment P and a number of times n that the interest is compounded per year, is:

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

If the initial investment is $1500, the rate is 4.85% anually compounded quarterly (n=4), then:

$\begin{gathered} A=1500(1+\frac{4.85/100}{4})^{4t} \\ =1500(1+\frac{4.85}{400})^{4t} \end{gathered}$

Therefore, the amount of money that she will have after t years, is:

$A=1500(1+\frac{4.85}{400})^{4t}$