anonymous 5 years ago ok walk me through this please: Find the accumulated amount at the end of 10 years for a principal of \$4500 Compounded quarterly at a yearly interest rate of 3%.

1. anonymous

formula is $4500(1+\frac{.03}{4})^{4\times 10}$

2. anonymous

which formula is that exactly

3. anonymous

clear what i put where and why?

4. anonymous

ok slowly. principle is 4500 interest is 3%=.03 number of compounding periods per year is 4 number of years is 10

5. amistre64

.03 is the annual rate; but its determined 4 times a year so it gets divided by 4.

6. anonymous

general formula is $P(1+\frac{r}{n})^{ny}$

7. anonymous

A=P(1+r)^n

8. amistre64

since the time span is now 4 times ayear; that means that for every year that goes by we have a factor of 4; so ^4t`

9. anonymous

ok is that that formula R=Pi/1-(1+i)^-n

10. anonymous

where r is the interest rate (as a decimal) P is the principle n is the number of compounding periods per year and Y is the number of years

11. anonymous

12. anonymous

this is compounded quarterly so you use n = 4

13. anonymous

i get $4500(1+\frac{.03}{4})^{40}=6067.57$ rounded

14. anonymous

ok ty

15. anonymous

welcome