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How do I calculate the balance in the account after 5 years if the interest is compounded quarterly? The principal is 2000 at 2% annual interest rate.
 Mar 15, 2014

Best Answer 

 #1
avatar+100529 
+8
Use this formula to calculate the amount at the end of five years:

A = P(1 + R/T)^(NT).........


Where
P = principal amount (the initial amount you borrow or deposit)

R = annual rate of interest (as a decimal)

T = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after N years, including interest.

N = number of times the interest is compounded per year


So, using your info, we have,

A = 2000(1 + .02/4)^(4*5)

A = 2000*(1.005)^(20)

Remember to do the exponent first, and you should be able to take it from there!!

Hope this helps
 Mar 15, 2014
 #1
avatar+100529 
+8
Best AnswerUse this formula to calculate the amount at the end of five years:

A = P(1 + R/T)^(NT).........


Where
P = principal amount (the initial amount you borrow or deposit)

R = annual rate of interest (as a decimal)

T = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after N years, including interest.

N = number of times the interest is compounded per year


So, using your info, we have,

A = 2000(1 + .02/4)^(4*5)

A = 2000*(1.005)^(20)

Remember to do the exponent first, and you should be able to take it from there!!

Hope this helps
CPhill Mar 15, 2014

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