Question

Ryan has a savings account that pays 4.5% interest annually compounded quarterly. She has not made any deposits or withdrawals for many years. Suppose that her current balance is $4,516.32. How much money was in her account 5 years ago?

Answer 1

Use compound interest formula

Answer 2

I always forget that formula xD

Answer 3

someone walk me through please!

Answer 4

this is why i think econ is so bs okay.. they say 4.5% annual interest compounded quarterly

that in no way tells you that it means that every quarter the compound interest is 4.5/4 %

Answer 5

@steve816 you there?

Answer 6

now in 5 years that means the inital money was compounded 5*4 =20 times of 4.5/4%

Answer 7

let x be the money in the beginning
x*(1+4.5/4%)^20=x*(1+0.045/4)^20=4,516.32

x*(1+0.045/4)^20=4,516.32
x=4,516.32/(1+0.045/4)^20

Answer 8

you can see why this formula comes about if you try do compound x one at a time
(x*(1+r)) money after 1 compound
(x*(1+r))*(1+r) = x*(1+r)^2 money after 2nd compound
(x*(1+r))*(1+r)*(1+r)=x*(1+r)^3 money after 3rd compound
and so on
.
.
x*(1+r)^20 = money after 20 compounds