Use the formula for computing future value using compound interest to determine the value of an account at the end of 6 years if a principal amount of $6,000 is deposited in an account at an annual interest rate of 6 % and the interest is compounded quarterly.

Question

Mathematics

Noah Barajas

2 February, 04:17

Use the formula for computing future value using compound interest to determine the value of an account at the end of 6 years if a principal amount of $6,000 is deposited in an account at an annual interest rate of 6 % and the interest is compounded quarterly.

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Answers (1)

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Braxton Ramos · Answer 1

Answer: the value of the account at the end of 6 years is is $8577

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P (1+r/n) ^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = 6000

r = 6% = 6/100 = 0.06

n = 4 because it was compounded 4 times in a year.

t = 6 years

Therefore,.

A = 6000 (1+0.06/4) ^4 * 6

A = 6000 (1+0.015) ^24

A = 6000 (1.015) ^24

A = $8577