PLEASE HELP AND EXPLAIN BECAUSE I DON'T UNDERSTAND. WILL FAN AND GIVE MEDAL. A customer deposits $2,000 in a savings account that pays 5.2% interest compounded quarterly. How much money will the customer have in the account after 3 years? After 5 years?

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amistre64 · Answer

it may be useful if you had been given a compounding interest formula

amistre64 · Answer

otherwise, we can work a simple interest formula

amistre64 · Answer

if i is the amount if yearly interest,  then each quarter the interest added is i/4

if the initial principal is P, then P*i/4 is added to P to form a new principal to play with

by working this out over and over again we can formulate the compound interest formula as:

P = Po(1+i/4)^n,  given that n is the number of periods that have passed.

in 3 years,  4*3 periods have passed
in 5 years,  4*5 periods have passed

anonymous · Answer

@amistre64 thank you so much, this really helped!