Dylan invested 7,200 in an account paying an interest rate of 2.3% compounded quarterly. Assuming no deposits or withdrawals are made, how much money, to the nearest dollar, would be in the account after 12 years?

Solution

Dy l an in v es t e d 7, 200 in an a cco u n t p a y in g an in t eres t r a t e o f 2.3% 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 d o ll a r, w o u l d b e in t h e a cco u n t a f t er 12 ye a rs ?

Amount : 9481.01

Solution steps

Translate the problem into an equation:

A = 7200 (1 + \frac{0.023}{4})^{4 \cdot 12}

7200 (1 + \frac{0.023}{4})^{4 \cdot 12} = 9481.00719 \dots

Round to the nearest hundredth:

9481.01

Amount : 9481.01