Problema Solution
Miramonte’s Mr. Shortenhaus went to a bank and deposited $4,600. The bank has an annual interest rate of 2.4%, and it compounds the interest quarterly. Find the total amount he will receive after 27 months.
Answer provided by our tutors
P = $4,600 is the principal;
r = 0.024 is the annual interest rate
m = 4 compounding periods per year
t = 27/12 years
n = m*t = 4*27/12 = 9 compounding periods
i = r/m = 0.024/4 = 0.006 interest rate per period
A = the future value
A = P(1 + i)^n
A = 4600(1 + 0.006)^9
A = $4,854.45
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the total amount he will receive after 27 months is $4,854.45.