Candice is saving up money to buy a car. Candice puts 7,000.00 into an account which earns 1% interest, compounded quarterly. How much will she have in the account after 5 years?Round your answer to the nearest cent.

Solution

C an d i ce i s s a v in g u p m o n ey t o b u y a c a r . C an d i ce p u t s 7, 000.00 in t o an a cco u n t w hi c h e a r n s 1% in t eres t, co m p o u n d e d q u a r t er l y . Ho w m u c h w i ll s h e ha v e in t h e a cco u n t a f t er 5 ye a rs ? R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Amount : 7358.44

Solution steps

Translate the problem into an equation:

A = 7000 (1 + \frac{0.01}{4})^{4 \cdot 5}

7000 (1 + \frac{0.01}{4})^{4 \cdot 5} = 7358.43852 \dots

Round to the nearest hundredth:

7358.44

Amount : 7358.44