Answered

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If you invest $1500 in at an interest rate of 7% for 5 years and the interest is compounded quarterly, how much money will you have after the 5 years? Round your answer to the nearest cent.

Sagot :

Answer:

$2122.17 (correct to the nearest cent).

Explanation:

To find the amount after 5 years, we use the compound interest formula below:

[tex]\begin{gathered} A=P(1+\frac{i}{k})^{nk} \\ \text{Principal, P}=1500 \\ Interest\text{ Rate, i =7\%} \\ \text{Period, k=4 (Quarterly)} \\ \text{Number of years, n=5} \end{gathered}[/tex]

Substitute the given values:

[tex]\begin{gathered} A=1500(1+\frac{0.07}{4})^{4\times5} \\ =1500(1+0.0175)^{20} \\ =1500(1.0175)^{20} \\ =\$2122.17 \end{gathered}[/tex]

After 5 years, you will have $2122.17 (correct to the nearest cent).

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