Carmen is planning to invest $2000 in an account earning 3.15% interest, compounded quarterly, for 5 years

how do i solve this?

Question

Carmen is planning to invest $2000 in an account earning 3.15% interest, compounded quarterly, for 5 years

how do i solve this?

kropot72 · Answer

First step is to find how many quarters are there in 5 years. Can you do that?

anonymous · Answer

how do i do that?

kropot72 · Answer

How many quarters are there in one year?

anonymous · Answer

4

kropot72 · Answer

Right. So there are 4 * 5 quarters in 5 years. The interest is paid every quarter so there are 20 payments of interest over the 5 years and each payment is added to the principal.
The quarterly interest rate is 0.0315/4
Using the formula for compound interest the amount A $$A=2000(1 + \frac{0.0315}{4})^{20}$$at the end of 5 years will be

anonymous · Answer

2339.72

kropot72 · Answer

Sorry. I should have put "...the amount A at the end of five years will be " and then put the equation

anonymous · Answer

2339.72 is that correct?

kropot72 · Answer

$$1+\frac{0.0315}{4}=1.007875$$
Then you raise that to the power of 20. What do you get?

anonymous · Answer

1.169858827

kropot72 · Answer

Right. Now just multiply 2000 by that result and you have the answer.