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When their child was born, Elaine and Mike Porter deposited $5,000 in a savings account at Tennessee Trust. The money earns interest at 6% compounded quarterly. Considering that they make no other deposits or withdrawals, how much will the account be worth in two years

Verified Answer :

nobillionaireNobley

Amount in compound interest = p(1 + r/t)^nt where p is the initial
deposit, r = rate, t = number of compunding in a period and n = period.

Here,
Amount after 2 years = 5,000(1 + (6/100)/4)^(2 x 4) = 5,000(1 +
0.06/4)^8 = 5,000(1 + 0.015)^8 = 5,000(1.015)^8 = 5,000(1.126493) =
$5,632.46

Answer:

The account be worth in two years be $5632.5 .

Step-by-step explanation:

Formula for compounded quarterly

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Where P is the principle , r is the rate of interest in the decimal form and t is the time.

As given

Elaine and Mike Porter deposited $5,000 in a savings account at Tennessee Trust.

The money earns interest at 6%

P =  $5000

6% is written in the decimal form.

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= 0.06

r = 0.06

t = 2 years

Put all the value in the formula

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Amount = $5632.5 (Approx)

Therefore the account be worth in two years be $5632.5 .


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