Suppose $1,500 is invested at an annual interest rate of 8 percent compounded quarterly. Compute the balance after 12 years.
A) $3,780.61
B) $3,820.61
C) $3,880.61
D) $3,890.61

Question

Quizplus · Accepted Answer

The balance after 12 years can be calculated using the formula for compound interest: $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. Plugging in the given values: $A = 1500(1 + \frac{0.08}{4})^{4*12}$, we get $A = 1500(1 + 0.02)^{48} = 1500(1.02)^{48} ≈ \$3,880.61$.

Suppose $1,500 Is Invested at an Annual Interest Rate of 8