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Popular Word Problems >

Matthew invests 500 into an account with a 2.5% interest that is compounded quarterly. How much money will he have in this account if he keeps it for 10 years?

Solution

M a tt h e w in v es t s 500 in t o an a cco u n t w i t h a 2.5% in t eres t t ha t i s co m p o u n d e d q u a r t er l y . Ho w m u c h m o n ey w i ll h e ha v e in t hi s a cco u n t i f h e k ee p s i t f or 10 ye a rs ?

Solution

Amount : 641.51

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.025}{4})^{4 \cdot 10}

500 (1 + \frac{0.025}{4})^{4 \cdot 10} = 641.51341 \dots

Round to the nearest hundredth:

641.51

Amount : 641.51

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