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18 December, 13:40

Isabelle invested $25,000 into an account that earns 3% annual interest compounded quarterly. If she makes no other deposits into the account, what will be the balance of her account in 20 years? Round to the nearest whole dollar.

$43451

$38451

$45451

$52451

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Answers (1)
  1. 18 December, 13:45
    0
    Answer: $45451

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

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

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = 25000

    r = 3% = 3/100 = 0.03

    n = 4 because it was compounded 4 times in a year.

    t = 20 years

    Therefore,

    A = 25000 (1+0.03/4) ^4 * 20

    A = 25000 (1+0.0075) ^80

    A = 25000 (1.0075) ^80

    A = $45451
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