Identify the key components, create a compound interest equation and answer the questions.
You invest $4000 into an account that compounds interest on a quarterly basis at 3%. How much money will you have after 5 years? Compound interest formula A=P(1+r/n)^(nt)
a P= ?
b r= ?
c n= ?
d t= ?
e write the compound interest equation that you would use to solve this problem:
f Value after 5 years (round to two decimal places) =
a P= $4000
b r= 0.03 (3%)
c n= 4 (quarterly)
d t= 5 years
e A= $4000(1+0.03/4)^(4*5)
f Value after 5 years = $4834.44922 (rounded to two decimal places, $4834.45)