If 100 is deposited into an account that earns a quoted rate

If $100 is deposited into an account that earns a quoted rate of 16%, compounded quarterly, for five years, how much will be in the account at the end of the 5th year? Round your answer to the nearest dollar.

$190

$210

$219

$216

Solution

Rate = 0.16 / 4 = 0.04 or 4%

Number of periods = 5 * 4 = 20

Future value = present value ( 1 + rate)ⁿ

Future value = 100 ( 1 + 0.04)²⁰

Future value = 100 * 2.19112

Future value = $219