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Popular Word Problems >

Ben opened a savings account and deposited 400.00 as principal. The account earns 12% interest, compounded quarterly. What is the balance after 2 years?

Solution

B e n o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 400.00 a s p r in c i p a l . T h e a cco u n t e a r n s 12% in t eres t, co m p o u n d e d q u a r t er l y . Wha t i s t h e ba l an ce a f t er 2 ye a rs ?

Solution

Amount : 506.71

Solution steps

Translate the problem into an equation:

A = 400 (1 + \frac{0.12}{4})^{4 \cdot 2}

400 (1 + \frac{0.12}{4})^{4 \cdot 2} = 506.70803 \dots

Round to the nearest hundredth:

506.71

Amount : 506.71

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