Zoe invested 16,000 in an account paying an interest rate of 3.6% compounded quarterly. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 20 years?

Solution

Z oe in v es t e d 16, 000 in an a cco u n t p a y in g an in t eres t r a t e o f 3.6% co m p o u n d e d q u a r t er l y . A ss u min g n o d e p os i t s or w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey, t o t h e n e a res t h u n d re d d o ll a rs, w o u l d b e in t h e a cco u n t a f t er 20 ye a rs ?

Amount : 32765.23

Solution steps

Translate the problem into an equation:

A = 16000 (1 + \frac{0.036}{4})^{4 \cdot 20}

16000 (1 + \frac{0.036}{4})^{4 \cdot 20} = 32765.23458 \dots

Round to the nearest hundredth:

32765.23

Amount : 32765.23