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5 November, 20:07

Pedro deposited $7,350 into a savings account 21 years ago. The account has an interest rate of 4.5% and the balance is currently $18,810.67. How often does the interest compound?

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  1. 5 November, 20:59
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    The interest is compounded quarterly because the formula is

    A=p (1+r/k) ^kt

    A it's 18810.67 but I will assume it's unknown?

    P present value 7350

    R interest rate 0.045

    K compounded quarterly 4

    Now solve the formula as the interest is compoundedquarterly

    A=7,350 * (1+0.045:4) ^ (4*21)

    A=18,810.67

    So the answer is quarterly
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