Question

You invest an initial $1000 in an account that has an annual interest rate of 2%,compounded quarterly. How much money will you have in the account after 5 years? Round answer to nearest whole number.

Answer 1

That means that the effective interest rate is 2%÷4 per quarter, or 0.5%, and the period is four times as many: 5x4=20

Thus
P = 1000 x (1 + 0.005) ^ 20
P = 1000 x 1.005 ^ 20
P = 1000 x 1.1048955771867307868906148336355
P = 1104.895577....

So the nearest dollar (whole number) would be 1,105

Answer 2

Thank you.

Answer 3

No problem!