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rent The compound interest formula is: A = P(1+ P(1+0) where A is the account balance, P is the principal, r is the rate as a decimal, n is the number of compounding periods per year, and t is the time in years. A principal of $2,000 is invested in an account that pays 10% annual interest, and the interest is compounded quarterly. How much is in the account after 5 years? Round your answer to the nearest hundredth.

Respuesta :

You have the following formula for the compound interest:

[tex]A=P(1+\frac{r}{n})^{nt}[/tex]

based on the given information you have:

P: principal investment = $2,000

r: rate = 10/100 = 0.1

n: number of compounding periods per year = 4

t: time in years = 5

Replace the previous values of the parameters to calculate the value of the account after 5 years.

[tex]\begin{gathered} A=(2,000)(1+\frac{0.1}{4})^{(4)(5)} \\ A=(2,000)(1.025)^{20} \\ A=3,277.23 \end{gathered}[/tex]

Hence, after 5 years the account is $3,277.23

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