Use the table to solve the problem. Round to the nearest cent.
-Universal Bank lends $4,300,000 for years at 8% compounded quarterly to Shining Shores Development Company to fund the building of a condominium complex. Find the future value.
A)$4,734,214.00
B)$4,730,000.00
C)$4,747,544.00
D)$6,318,119.00

Question

Use the table to solve the problem. Round to the nearest cent. 
-Universal Bank lends $4,300,000 for  years at 8% compounded quarterly to Shining Shores Development Company to fund the building of a condominium complex. Find the future value. 
A)$4,734,214.00 
B)$4,730,000.00 
C)$4,747,544.00 
D)$6,318,119.00

Quizplus · Accepted Answer

We can use the formula for compound interest: A=P(1+r/n)^(nt), where A is the future value, P is the principal, r is the interest rate, n is the number of times compounded per year, and t is the time in years.
Plugging in the values given, we get: 
A = 4,300,000(1+0.08/4)^(4*11) 
A = 4,747,544.17
Rounding to the nearest cent gives us an answer of $4,747,544.00, which is choice C. We use the formula $A=P\left(1+\dfrac{r}{n}ight)^{nt}$ where $P$ is the principal, $r$ is the annual interest rate, $n$ is the number of compounding periods per year, and $t$ is the time in years. Plugging in the values, we get:
$$A=4,300,000\left(1+\dfrac{0.08}{4}ight)^{4	imes 11}=4,747,543.96$$
Rounded to the nearest cent, the future value is $4,747,544.00$, which is option C.

Use the Table to Solve the Problem