Problema Solution

Andrea’s savings account has a balance of $3668. After 3 years, what will the amount of interest be at 4% compounded quarterly?

Answer provided by our tutors

P = $3668 the principal


t = 3 years


r = 0.04 or 4% annual rate


m = 4 compounding period per year


i = 0.04/4 = 0.01 interest rate per period


n = t*m = 3*4 = 12 total number of compounding periods


A = the future value


I = interest


A = P(1 + i)^n


A = 3668(1 + 0.01)^12


by solving we find:


A = $4,133.19


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I = A - P


I = $4,133.19 - $3,668


I = $465.19


the amount of interest will be $465.19.