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Compound Interest, SMB-009

Jill opens a Smartsave Account that pays interest at 5% per annum, compounded quarterly.

Jill deposits $700 when she opens the account and makes no further deposits or withdrawals.

What will be the balance in the account at the end of 3 years, to the nearest dollar?   (2 marks)

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`$813`

Show Worked Solution

`text{Compounding periods}\ (n) =3 xx 4=12`

`text{Compounding rate}\ (r) = \frac{0.05}{4} = 0.0125`

`FV` `= PV(1 + r)^n`
  `= 700(1 + 0.0125)^12`
  `= 812.528…`
  `=$813\ \ \text{(nearest dollar)}`

Filed Under: Compound Interest Tagged With: num-title-ct-coreb, smc-4334-10-Find FV

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