A principal of 5500 is invested in an account paying an annu

A principal of $5500 is invested in an account paying an annual rate of 4%. Find the amount in the account after 4 years if the account is compounded semiannually, quarterly, and monthly. The amount in the account after 4 years if the account is compounded semiannually The amount in the account after 4 years if the account is compounded quarterly is The amount in the account after 4 years if the account is compounded monthly is

Solution

Formula for amount in compound interest:

A = Principal( 1 +r/100)^n

Semi annually : A1 = P ( 1+r/200)^(2n)

Quaterally : A2 = P ( 1 +r/400)^(4n)

Monthly : A3 = P ( 1 +r/1200) ^(12n)

P = $ 5500 ; r= 4% n= 4 yrs

a) A1 = $ 6444.13

b) A2 = $ 6449.18

c) A3 = $ 5724.37