Answer: A = P(1.005)²⁰
Step-by-step explanation:
The formula for interest compounded over a period of time is:
[tex]A=P_o\bigg(1+\dfrac{r}{n}\bigg)^{nt}\qquad \text{where}[/tex]
- A is accrued amount
- P₀ is the initial amount invested
- r is the interest rate (convert to a decimal)
- n is the number of times compounded in a year
- t is the number of years
It is given that r = 2% (0.02), n = quarterly (4), and t = 5
[tex]A=P_o\bigg(1+\dfrac{0.02}{4}\bigg)^{4\cdot 5}\\\\A = P_o(1+0.005)^{20}\\\\A=P_o(1.005)^{20}[/tex]
