MATH SOLVE

6 months ago

Q:
# Stephen invests $2,000 in a savings account paying 6% annual interest. Find the balance after 5 years if the interest is compounded quarterly.

Accepted Solution

A:

Answer:The balance of Stephen's savings account after 5 years is US$ 2,693.71Step-by-step explanation:1. Let's review the data given to us for solving the question:Investment = US$ 2,000Annual interest rate = 6% compounded quarterly = 1.5% per quarterDuration of the investment = 5 years = 20 quarters2. Let's find the future value of this investment after 5 years or 20 quarters, using the following formula:FV = PV * (1 + r) ⁿPV = Investment = US$ 2,000rate (r) = 1.5% = 0.015number of periods (n) = 20Replacing with the real values, we have:FV = 2,000 * (1 + 0.015) ²⁰FV = 2,000 * 1.015 ²⁰FV = 2,000 * 1.34685501FV = US$ 2,693.71