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Popular Word Problems >

you deposit 5000 in an account that pays 2.25% annual interest. Find the balance after 5 years when the interest is compounded quarterly. Round your answer to the nearest cent.

Solution

yo u d e p os i t 5000 in an a cco u n t t ha t p a ys 2.25% ann u a l in t eres t . F in d t h e ba l an ce a f t er 5 ye a rs w h e n t h e in t eres t i s co m p o u n d e d q u a r t er l y . 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 .

Solution

Amount : 5593.6

Solution steps

Translate the problem into an equation:

A = 5000 (1 + \frac{0.0225}{4})^{4 \cdot 5}

5000 (1 + \frac{0.0225}{4})^{4 \cdot 5} = 5593.59776 \dots

Round to the nearest hundredth:

5593.6

Amount : 5593.6

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