Fernando has a savings account balance of $2,471.23. The interest rate on the account is 2.4% compounded quarterly. If he opened the account nine years ago, what was the value of his initial deposit?
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In 9 yrs there are 36 quarters.
The interest rate is 2.4/4 per quarter
just stick those into the compound interest formula - it needs the rate & number of periods to be THE SAME TIME UNITS.
Fernando is such a boss name. don't you think? :)
A = P [( 1 + ( r / n) ] ^ (nt)
P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n = number of times the interest is compounded per year
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2471.23 = P [ ( 1 + (.024)/ 4 ] ^ [ (4)(9)]
2471.23 = P [ (1 + .006) ] ^ 36
2471.23 = P [ 1.006 ] ^ 36
2471.23 = 1.24 P
P = $ 1 992 . 93 approximately
@ merengat --> Will you post your work? Or, find the error in mine, please. Thanks.
correct, without rounding i get 1992.44
Call a i deposit on a monthly
x is the interest rate
n is the number of months post
After January, the amount of
a + ax = a (x + 1)
In early February:
After n months, the amount of principal and interest are:
Applying the formula, instead of on and