Question

Suppose you invest $2,500 into a regular savings account with 2.95% annual interest rate that compounds quarterly. How much would your investment be worth in 10 years?

Answer 1

`$3554.18`

Explanation:

Principle = `$2500`
Interest rate = `2.95%` = 0.0295
Time = 10 years
Compounding period = `Time xx 4` = 40

Thus interest rate = `0.0295//4`= 0.007375

`A = P(1+i)^n`
`A = 2500(1+0.007375)^40`
`A = 2500(1.007375)^40`
`A = 2500(1.3416)`
`A = 3354.18`