If you deposit $1,000 today in a bank account that pays 4%, compounded quarterly, how much will you have in ten years?
A)$1,040.60
B)$1,104.62
C)$1,460.24
D)$1,488.86

Question

Quizplus · Accepted Answer

Use the formula:

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

where:

A = amount after time t
P = principal (initial amount)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = time (in years)

Plugging in the values given in the problem, we get:

A = 1000(1 + 0.04/4)^(4*10)
A = 1000(1 + 0.01)^40
A = 1000(1.01)^40
A = 1000(1.4889)

A = $1,488.86

Therefore, the best choice is (D) $1,488.86. We can use the formula A=P(1+r/n)^(nt) where:
A = the amount after time t,
P = the principal (initial amount),
r = the annual interest rate (as a decimal),
n = the number of times the interest is compounded per year, and
t = the time in years.

Plugging in the values, we get:

A = 1000(1+0.04/4)^(4*10)
A = 1000(1.01)^40
A = 1000(1.48024)
A = $1488.86

Therefore, the answer is D.

If You Deposit $1,000 Today in a Bank Account That