Wednesday
May 4, 2016

# Homework Help: Alg 2

Posted by rock on Tuesday, December 13, 2011 at 11:19am.

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...
• Alg 2 - Steve, Tuesday, December 13, 2011 at 12:58pm

A(t)=P(1+ r/n)^nt
A(20) = 1000(1.013333)^80
= 1000 * 13.7795
= 1377.95

Don't know how you plugged in your numbers to get 1010.

• Alg 2 - correction - Steve, Tuesday, December 13, 2011 at 1:03pm

Rats! I compounded 3x/year, not 4.

A(t)=P(1+ r/n)^nt
A(20) = 1000(1.01)^80
= 1000 * 2.21671
= 2216.71

• Alg 2 - Paul, Friday, November 6, 2015 at 11:48pm

An account with annual compound, apr of 2% and an initial deposit of 224, after 535 years