A bank offers an investment account with an annual interest rate of 1.44% compounded quarterly. Mai invests \$3700 into the account for 5 years. Assuming no withdrawals are made, how much money is in Mai's account after 5 years?

Solution

A bank o ff ers an in v es t m e n t a cco u n t w i t h an ann u a l in t eres t r a t e o f 1.44% co m p o u n d e d q u a r t er l y . M ai in v es t s $3700 in t o t h e a cco u n t f or 5 ye a rs . A ss u min g n o w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey i s in M a i^{'} s a cco u n t a f t er 5 ye a rs ?

Amount : 3975.71

Solution steps

Translate the problem into an equation:

A = 3700 (1 + \frac{0.0144}{4})^{4 \cdot 5}

3700 (1 + \frac{0.0144}{4})^{4 \cdot 5} = 3975.71072 \dots

Round to the nearest hundredth:

3975.71

Amount : 3975.71