1. If $7200 is invested in a savings account now at the interest rate 14.25%, compounded quarterly (once every 3
months, or four times per year). How much will the account be worth in 3, 10, 14, and 20 years?

After 3 years: $
After 10 years: $
After 14 years: $
After 20 years: $

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ronhagrid310 ronhagrid310 · Answer 1 · 2020-06-23T02:40:51+02:00

Answer:

With a principal = 7200$, interest rate = 14.25% = 0.1425 (compounded quarterly), the amount of money(M) after n years is calculated by formula:

M = Principal x (1 + rate)^time

= 7200 x (1 + 0.1425/4)^(nx4)

(the rate is divided by 4 and the time is year x 4, because this is compounded quarterly, 1 year has 4 quarters, each quarter has 3 months)

=> After 3 years:

M = 7200 x (1 + 0.1425/4)^(3x4) = 10958.7951$

=> After 10 years:

M = 7200 x (1 + 0.1425/4)^(10x4) =29203.4074$

=> After 14 years:

M = 7200 x (1 + 0.1425/4)^(14x4) = 51129.7818$

=> After 20 years:

M = 7200 x (1 + 0.1425/4)^(20x4) = 118449.862$

Hope this helps!