If $100 is placed in an account that earns a nominal 4%
compounded quarterly, what will it be worth in 5 years?
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Using the compound interest formula, we have thatP = $100, r= 4/100= 0.04, n=4, t=5 , therefore,
A is deposit value in future
A = P (1+ r/n)^nt
A = 100 (1+ 0.04/4)^(4)(5)
A = 100 (1.01)^20
A = 100 (1.22)
A = $122 approximately
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