Suppose that when your friend was born, your friend's parents deposited $5000 in an account paying 4.3% interest compounded quarterly. What will the account balance be in 14 years?
To calculate the account balance after 14 years, we will use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final account balance
P = the principal amount (initial deposit)
r = annual interest rate (in decimal form)
n = number of times the interest is compounded per year
t = number of years
In this case:
P = $5000
r = 4.3% = 0.043 (decimal form)
n = 4 (compounded quarterly)
t = 14 years
A = 5000(1 + 0.043/4)^(4*14)
A = 5000(1 + 0.01075)^56
A = 5000(1.01075)^56
A ≈ 5000(1.71511)
A ≈ $8575.55
Therefore, the account balance after 14 years will be approximately $8575.55.