posted by rock on .
Suppose you deposit a principal amount of p dollars in a bank account that pays compound interest. If the annual interest rate r (expressed as a decimal) and the bank makes interest payments n times every year, the amount of money A you would have after t years is given by
Find the account balance after 20 years if you started with a deposit of $1000, and the bank was paying 4% interest compounded quarterly (4 times a year). Round your answer to the nearest cent.
I used the formula A(t)=P(1+ r/n)nt
and got 1010 and this is not the correct answer...
A(20) = 1000(1.013333)^80
= 1000 * 13.7795
Don't know how you plugged in your numbers to get 1010.
Rats! I compounded 3x/year, not 4.
A(20) = 1000(1.01)^80
= 1000 * 2.21671
An account with annual compound, apr of 2% and an initial deposit of 224, after 535 years