If Vu deposits $5,500.00 in a savings account that earns 4% interest per year compounded quarterly, how much money can she expect to be in the account in 5 years? Round your answer to two decimal places.
A) $6,600.00
B) $1,211.05
C) $4,498.49
D) $6,711.05

Question

Quizplus · Accepted Answer

To calculate the future value of Vu's deposit, we use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($5,500.00), r is the annual interest rate (4%, or 0.04 as a decimal), n is the number of times that interest is compounded per year (quarterly, so 4 times), and t is the time the money is invested for (5 years). Plugging in the values: A = $5,500(1 + 0.04/4)^(4*5) = $5,500(1 + 0.01)^20 ≈ $6,711.05.

If Vu Deposits $5,500