SOLUTION: Suppose you deposit a principal amount of p dollars in abank account that pays compound interest. If the annual interest rate r (expressed as a decimal) and the bank makes interest

Question 615668: Suppose you deposit a principal amount of p dollars in abank account that pays compound interest. If the annual interest rate r (expressed as a decimal) and the bank makes interest payments n times every year, the amount of money A you would have after t years is given by A(t)=P(1+r/n)nt.
Find the account balance after 20 years if you started with a deposit of $1000, and the bank was paying 4% interest compounded quarterly (4 times a year). Round your answer to the nearest cent.
Answer by unlockmath(1688) (Show Source): You can put this solution on YOUR website!
Hello,
There's an error in the formula given : A(t)=P(1+r/n)nt
It should be A(t)=P(1+r/n)^nt
Now we can plug in the numbers:
A=1000(1+.04/4)4(20)
This comes out to:
$2216.72 (approx)
Make sense?
RJ
www.math-unlock.com
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