Natalie puts 400.00 into an account to use for school expenses. The account earns 4% interest, compounded quarterly. How much will be in the account after 8 years?Round your answer to the nearest cent.

Solution

N a t a l i e p u t s 400.00 in t o an a cco u n t t o u se f or sc h oo l e x p e n ses . T h e a cco u n t e a r n s 4% in t eres t, co m p o u n d e d q u a r t er l y . Ho w m u c h w i ll b e in t h e a cco u n t a f t er 8 ye a rs ? R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Amount : 549.98

Solution steps

Translate the problem into an equation:

A = 400 (1 + \frac{0.04}{4})^{4 \cdot 8}

400 (1 + \frac{0.04}{4})^{4 \cdot 8} = 549.97627 \dots

Round to the nearest hundredth:

549.98

Amount : 549.98