Problema Solution
Find the accumulated amount A if the principal P = $11,000 is invested at the interest rate of r = 5% per year for t = 5.5 years, compounded quarterly
Answer provided by our tutors
P = $11,000 is the principal
t = 5.5 years
r = 0.05 or 5% the annual interest rate
m = 4 is the number of compounding periods per year
n = m*t = 4*5.5 = 22 is the number of compounding periods
i = r/m = 0.05/4 is the interest rate per period
A = accumulated amount
A = P(1 + i)^n
A = 11000(1+0.05/4)^22
A = $14,457.17
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the accumulated amount after 5.5 years is $14,457.17.