A couple decides to set aside 3000 in a savings account for a second honeymoon trip. It is compounded quarterly for 13 years at 8%. Find the amount of money they will have in 13 years. Round your answer to the nearest cent.

Solution

A co u pl e d ec i d es t o se t a s i d e 3000 in a s a v in g s a cco u n t f or a seco n d h o n ey m oo n t r i p . I t i s co m p o u n d e d q u a r t er l y f or 13 ye a rs a t 8%. F in d t h e am o u n t o f m o n ey t h ey w i ll ha v e in 13 ye a rs . 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 .

Amount : 8400.98

Solution steps

Translate the problem into an equation:

A = 3000 (1 + \frac{0.08}{4})^{4 \cdot 13}

3000 (1 + \frac{0.08}{4})^{4 \cdot 13} = 8400.98455 \dots

Round to the nearest hundredth:

8400.98

Amount : 8400.98