Expert: Sherry Wallin - 10/13/2010

Question
Suppose you deposit $400 in an account that earns 0.75 percent each quarter. You make no withdrawals and deposit no money into the account. How much money will accumulate after 2.5 years?
( This is with simple interest)

Answer
SallyJane~

I = Prt => P + I = P + Prt will be the accumulated amount

Where I stands for interest, P stands for principle, r stands for rate and t stands for time. You want to know how much money will be in the account after 2.5 years so you must calculate the number of quarters in 2.5 years which is 10 = n and then I = Prt becomes I = Prn
= 400(.0075)10 = 30=> this is the interest, now add that to the original amount in the account $400=> 400 + 30 = $430 this is using
P + Prn = P(1 + rn) = 400(1 +.0075*10) = 400(1 +.075) = 400(1.075) = 430

Math Prof