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Popular Word Problems >

Meg invested 16,000 in a savings account. If the annual interest rate is 6%, how much will be in the account in5 years with quarterly compounding?

Solution

M e g in v es t e d 16, 000 in a s a v in g s a cco u n t . I f t h e ann u a l in t eres t r a t e i s 6%, h o w m u c h w i ll b e in t h e a cco u n t in 5 ye a rs w i t h q u a r t er l y co m p o u n d in g ?

Solution

Amount : 21549.68

Solution steps

Translate the problem into an equation:

A = 16000 (1 + \frac{0.06}{4})^{4 \cdot 5}

16000 (1 + \frac{0.06}{4})^{4 \cdot 5} = 21549.68010 \dots

Round to the nearest hundredth:

21549.68

Amount : 21549.68

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