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Gabriel and Avery deposit 1,000.00 into a savings account which earns 5% interest compounded quarterly. They want to use the money in the account to go on a trip in 2 years. How much will they be able to spend?

Solution

Gabriel and Avery deposit 1, 000.00 into a savings account which earns 5% interest compounded quarterly. They want to use the money in the account to go on a trip in 2 years. How much will they be able to spend?

Solution

Amount : 1104.49

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.05}{4})^{4 \cdot 2}

1000 (1 + \frac{0.05}{4})^{4 \cdot 2} = 1104.48610 \dots

Round to the nearest hundredth:

1104.49

Amount : 1104.49

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