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Popular Word Problems >

Mr. Fernandez deposits 60,000 into an account that pays 2.5% annual interest compounded quarterly. What will be the balance after 20 years? Round to the nearest cent.

Solution

M r . F er nan d ez d e p os i t s 60, 000 in t o an a cco u n t t ha t p a ys 2.5% ann u a l in t eres t co m p o u n d e d q u a r t er l y . Wha t w i ll b e t h e ba l an ce a f t er 20 ye a rs ? R o u n d t o t h e n e a res t ce n t .

Solution

Amount : 98769.47

Solution steps

Translate the problem into an equation:

A = 60000 (1 + \frac{0.025}{4})^{4 \cdot 20}

60000 (1 + \frac{0.025}{4})^{4 \cdot 20} = 98769.46934 \dots

Round to the nearest hundredth:

98769.47

Amount : 98769.47

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