Question 1: Steve decided to deposit $4,680 into a savings account with 6.5% interest, compounded quarterly. Assuming that no withdrawals are made, how much will he have in the account after 7 years?

Question 2: You currently have $6,000 saved in your bank account. You have decided to use $2100 for your upcoming spring break trip. What percentage of your savings did you use?

 

Answer:

Question 1

Future value = Present value*(1+i/m)^n*m

i = interest rate = 6.5%; m = compounding frequency = 4; n = no. of years = 7

interest is compounded quarterly. there are 4 quarters in a year. so, compounding frequency is 4.

Future value = $4,680*(1+0.065/4)^7*4 = $4,680*(1+0.01625)²⁸ = $4,680*1.01625²⁸ = $4,680*1.5704193610417004930673626823071 = $7,349.56

he will have $7,349.56 in the account after 7 years.

Question 2

percentage of savings used = (amount used/savings)*100 = ($2,100/$6,000)*100 = 0.35*100 = 35%

You used 35 percentage of your savings.