Suppose you deposit $400 in an account that earn 0.75 percent each quarter. You make no withdrawal from the account and deposit no mone money into the account. How much money will accumulate after 2.5 years
i think the answer is $480
suppose you deposit $400 in an account
To calculate the amount of money that will accumulate after 2.5 years, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount of money accumulated
P = the principal amount (initial deposit)
r = the annual interest rate (0.75% or 0.0075 in decimal form)
n = the number of times interest is compounded per year (quarterly, so n = 4)
t = the number of years (2.5 in this case)
Substituting these values into the formula:
A = 400(1 + 0.0075/4)^(4*2.5)
Now, let's compute the value using a calculator:
A ≈ 400(1.001875)^(10)
Using the power of 10 and rounding to 2 decimal places:
A ≈ 400(1.018779)
A ≈ $407.51
So, approximately $407.51 will accumulate after 2.5 years.