The Browns are saving up to go on a family vacation in 5 years. They invest \$3100 into an account with an annual interest rate of 1.45% compounded quarterly. Assuming no withdrawals are made, how much money is in the Browns' account after 5 years?

Solution

T h e B ro w n s a re s a v in g u p t o g o o n a f ami l y v a c a t i o n in 5 ye a rs . T h ey in v es t $3100 in t o an a cco u n t w i t h an ann u a l in t eres t r a t e o f 1.45% co m p o u n d e d q u a r t er l y . 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 t h e B ro w n s^{'} a cco u n t a f t er 5 ye a rs ?

Amount : 3332.66

Solution steps

Translate the problem into an equation:

A = 3100 (1 + \frac{0.0145}{4})^{4 \cdot 5}

3100 (1 + \frac{0.0145}{4})^{4 \cdot 5} = 3332.66079 \dots

Round to the nearest hundredth:

3332.66

Amount : 3332.66