Cindy deposited $1,000 in an account that pays 12% interest compounded quarterly. How much money will Cindy have in the account after 7 years?
7*4 = 28 periods
r = 12/4 = 3% per period
1000 * (1.03)^28 = 2287.93
A = P(1+(r/n))^(nt)
A=Amount present after interest compounded
P=Initial Deposit
r=rate expressed as decimal
n=# of times interest is received in one year. (Look for keywords: quarterly = 4)
t=timespan of investment
A=1000(1+(0.12/4))^(4*7)
A=$2287.93
Confirms Damon's answer.
To find out how much money Cindy will have in the account after 7 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the initial principal amount (in this case, $1,000)
r = the annual interest rate (in decimal form, 12% is 0.12)
n = the number of times that interest is compounded per year (in this case, quarterly so 4 times)
t = the number of years (in this case, 7 years)
We can substitute these values into the formula and calculate the final amount:
A = 1000(1 + 0.12/4)^(4*7)
A = 1000(1 + 0.03)^(28)
A = 1000(1.03)^(28)
A ≈ $2,005.93
So, after 7 years, Cindy will have approximately $2,005.93 in the account.