How much money would you have in a savings account at the end of one year, if you saved $1000 at two percent interest compounded quarterly? Round to the nearest dollar
To find out how much money you would have in a savings account at the end of one year with a $1000 deposit and a two percent interest rate compounded quarterly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the total amount after interest
P = principal amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, P = $1000, r = 2% (or 0.02 as a decimal), n = 4 (quarterly compounding), and t = 1 (one year).
Plugging in these values, we have:
A = 1000(1 + 0.02/4)^(4*1)
Simplifying the calculation:
A = 1000(1.005)^4
A = 1000(1.0201005)
A ≈ $1020.10
Rounding to the nearest dollar, you would have approximately $1020 in the savings account at the end of one year.