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Popular Word Problems >

You deposit 70 in an investment account that earns 6% annual interest compounded quarterly.What is the balance of the account after 5 years?

Solution

Y o u d e p os i t 70 in an in v es t m e n t a cco u n t t ha t e a r n s 6% 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 i s t h e ba l an ce o f t h e a cco u n t a f t er 5 ye a rs ?

Solution

Amount : 94.28

Solution steps

Translate the problem into an equation:

A = 70 (1 + \frac{0.06}{4})^{4 \cdot 5}

70 (1 + \frac{0.06}{4})^{4 \cdot 5} = 94.27985 \dots

Round to the nearest hundredth:

94.28

Amount : 94.28

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