Posted by katie on .
You deposit $2200 in an account that pays 3% annual interest. After 15 years, you withdraw the money, what is the balance if the interest is compounded quarterly?
so I figure you would get 2650.00 help please
What you probably did was calculated simple interest for 15 years on $1000 and added to $2200 to give $2650.
Compound interest formula are based on the number of periods, n, the interest was compounded.
The interest being compounded 4 times a year, so there are 15*4=60 periods of 3 months each. The corresponding interest rate for each period is therefore r = 3%/4=0.0075.
The formula for the future value using compound interest is:
FV = Principal * (1+r)^n