Question

Clara invests $5000 in an account that pays 6.25% per year. How much will she have after 15 years? If the interest was compounded quarterly, how much would she have?

Answer 1

a) The Amount She will have after 15 years

Amount =$5000(1+0.0625)^15

=$12413.78116

b) The Amount She would have if the interest was compounded Quarterly.

Quarterly interest rate =0.0625÷4

=0.015625

Total number of periods =15×4

=60

Amount =$5000(1+0.015625)^60

=$12675.72953