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Gabe and Justine deposit 5,000.00 into a savings account which earns 12% interest compounded quarterly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Gabe and Justine deposit 5, 000.00 into a savings account which earns 12% interest compounded quarterly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Amount : 7128.8

Solution steps

Translate the problem into an equation:

A = 5000 (1 + \frac{0.12}{4})^{4 \cdot 3}

5000 (1 + \frac{0.12}{4})^{4 \cdot 3} = 7128.80443 \dots

Round to the nearest hundredth:

7128.8

Amount : 7128.8

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