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Compound Interest, SMB-010

A bank's Compound Saver Account pays interest at 4% per annum, compounded quarterly.

Sacha deposits $6500 when he opens his Compound Saver Account and makes no further deposits or withdrawals.

What will be the balance in the account at the end of 1.5 years, to the nearest dollar?   (2 marks)

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`$6900`

Show Worked Solution

`text{Compounding periods}\ (n) =1.5 xx 4=6`

`text{Compounding rate}\ (r) = \frac{0.04}{4} = 0.01`

`FV` `= PV(1 + r)^n`
  `= 6500(1 + 0.01)^6`
  `= 6899.88…`
  `=$6900\ \ \text{(nearest dollar)}`

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

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