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20 June, 06:52

Walter's savings account has a balance of $273. After 5 years, what will the amount of interest be at 5% compounded quarterly?

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  1. 20 June, 06:53
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    Given:

    Principal = $273

    Interest rate = 5% compounded quarterly

    time = 5 years

    A = P (1 + r/n) ^nt

    A = amount of money accumulated plus interest

    P = principal

    r = interest rate (in decimal form)

    n = number of times the interest is compounded per year

    t = total number of years the amount is deposited

    A = $273 (1 + 0.05/4) ⁴*⁵

    A = $273 (1 + 0.0125) ²⁰

    A = $273 (1.0125) ²⁰

    A = $273 * 1.2820

    A = $349.99

    $349.99 - 273 = $76.99

    The compounded interest amounts to $76.99
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