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math

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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

  • math -

    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
    =2200*1.0075^60
    =2200*1.565681
    =$3444.50

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