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Popular Word Problems >

Franklin opened a savings account and deposited 500.00 as principal. The account earns 8% interest, compounded quarterly. What is the balance after 3 years?

Solution

F r ank l in o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 500.00 a s p r in c i p a l . T h e a cco u n t e a r n s 8% in t eres t, co m p o u n d e d q u a r t er l y . Wha t i s t h e ba l an ce a f t er 3 ye a rs ?

Solution

Amount : 634.12

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.08}{4})^{4 \cdot 3}

500 (1 + \frac{0.08}{4})^{4 \cdot 3} = 634.12089 \dots

Round to the nearest hundredth:

634.12

Amount : 634.12

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