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25 December, 13:11

If you invest $5,000 at 1.8 percent for 5 years, compounded quarterly, what is the amount in the

account at the end of 5 years?

A. $5,450

B. $5,469

C. $5,470

D. $5,560

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Answers (1)
  1. 25 December, 13:33
    0
    Answer: C. $5,470

    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 = $5000

    r = 1.8% = 1.8/100 = 0.018

    n = 4 because it was compounded 3 times in a year (12/4 = 3 times)

    t = 5 years

    Therefore,

    A = 5000 (1 + 0.018/4) ^4 * 5

    A = 5000 (1 + 0.0045) ^20

    A = 5000 (1.0045) ^20

    A = $5470 to the nearest whole number
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