If $100 is deposited into an account that earns a quoted rate of 16%, compounded quarterly, for five years, how much will be in the account at the end of the 5th year? Round your answer to
The nearest dollar.
A)$219
B)$216
C)$210
D)$190

Question

Quizplus · Accepted Answer

The amount in the account at the end of the 5th year can be calculated using 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 (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Here, P = $100, r = 16% or 0.16, n = 4 (since the interest is compounded quarterly), and t = 5 years. Plugging these values into the formula gives A = 100(1 + 0.16/4)^(4*5) = 100(1 + 0.04)^20 ≈ $219.

If $100 Is Deposited into an Account That Earns a Quoted