Michelle invests $1000 at a bank offering 3% compounded quarterly. write an equation to model the growth of the investment.
Business · High School · Tue Nov 03 2020
Answered on
Given the statement:
Michelle invests $1000 at a bank offering 3% compounded quarterly.
Write an equation to model the growth of the investment.
Representation:
The equation model can be written similarly to the formula for compound interest.
A = P (1 + r/n)^nt
A= Future value
P = Principal Amount = $1000
n = compounded times = 4 since quarterly
r = interest rate = 3% or 0.03
A = 1000( 1 + 0.03 / 4)^4t
A = 1000( 1.0075)^4t
Final answer:
A = 1000( 1.0075)^4t