Question

Adam invests $2,500.00 in an account earning 6.4% APR compounded quarterly. What will the value of the account be in 10 yr? Show your work.

$2930.06

$4717.24

$99,282,779,600.00

$4648.97

Answer 1

Use the compound interest formula A = P(1 + r/n)^{nt}.

P = 2500, r = 0.064, n = 4, t = 10:

A = 2500(1 + 0.064/4)^{4·10} = 2500(1.016)^{40} ≈ 2500(1.8869) ≈ 4717.24.

So the value after 10 years is about $4,717.24.