Question

If $13,000 is deposited in a bank account paying 6% compounded quarterly, what amount will be in the account after 8 years? How much interest will be earned during the 8 years?

The amount after 8 years will be $___
How much interest will be earned during the 8 years? _____

Answer 1

r = 6% / 4 = 1.5% = 0.015 = Rate /qtr.

n = 8 yrs * 4 comp. /yr = 32 comp.

Pt = Po(1 + r)^n,
=13000(1.015)^32,
= 13000 * 1.6103 = 20934.22.

I = Pt - Po = 20934.22 - 13000 = 7934.22.