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18 March, 21:35

You deposit $975.52 in a bank account. Find the balance after 4 years if the account pays 7.25% annual interest compounded quarterly

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  1. 18 March, 21:52
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    The final ballance will be $1300.37.

    Step-by-step explanation:

    In this case we have a compounded interest, in order to calculate the final balance we need to use the following formula:

    S = P (1 + r/n) ^ (n*t)

    Where S is the final balance, P is the initial investment, r is the rate of interest, t is the time and n is the rate at which it is compounded. Since we have all the values we can directly apply to the formula as follows:

    S = 975.52 * (1 + 0.0725/4) ^ (4*4)

    S = 975.52 * (1.018125) ^ (16)

    S = 975.52*1.333

    S = 1300.37

    The final ballance will be $1300.37.
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