Ernest puts $6,000.00 into an account to use for school expenses. The account earns 2% interest, compounded quarterly. How much will be in the account after 4 years?
Use the formula A=P1+
r
n
nt, where A is the balance (final amount), P is the principal (starting amount), r is the interest rate expressed as a decimal, n is the number of times per year that the interest is compounded, and t is the time in years.
Round your answer to the nearest cent.
Using the formula A = P(1 + r/n)^(nt), we can plug in the given values:
P = $6,000.00
r = 0.02 (2% expressed as a decimal)
n = 4 (compounded quarterly)
t = 4 years
A = 6000(1 + 0.02/4)^(4*4)
A = 6000(1 + 0.005)^16
A = 6000(1.005)^16
A = 6000(1.0816)
Calculating this, we find that there will be approximately $6489.60 in the account after 4 years. Answer: \boxed{6489.60}.