Ritchie will have $4,053.7 in the account after one year
Deposit amount = $4000
Rate = 5.3% ( Compounded quarterly)
Since the rate is compounded quarterly thus -
5.3% / 4
= 1.325
Similarly determining the number of quarters -
= 12/3 ( There are 12 months in a year and 3 months per quarter)
= 4
Compound interest can be thought of as the addition of the loan's interest to the deposit's principal amount. Compound interest is therefore calculated using the Principal plus any prior interest.
Calculating the compound interest -
A = P (1 + r/100)^t
= 4000 ( 1 + 1.325/ 100 )^4/4
= 4,000 x 1.01325
= 4053.7
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