John places 5,000 into a mutual fund that is paying 8% annual interest. The interest is being compounded quarterly. How much money will be in the account in 5 years?

Solution

John places 5, 000 into a mutual fund that is paying 8% annual interest. The interest is being compounded quarterly. How much money will be in the account in 5 years?

Solution

Amount : 7429.74

Solution steps

Translate the problem into an equation:

A = 5000 (1 + \frac{0.08}{4})^{4 \cdot 5}

5000 (1 + \frac{0.08}{4})^{4 \cdot 5} = 7429.73697 \dots

Round to the nearest hundredth:

7429.74

Amount : 7429.74

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