Answer:
The balance of Stephen's savings account after 5 years is US$ 2,693.71
Step-by-step explanation:
1. Let's review the data given to us for solving the question:
Investment = US$ 2,000
Annual interest rate = 6% compounded quarterly = 1.5% per quarter
Duration of the investment = 5 years = 20 quarters
2. Let's find the future value of this investment after 5 years or 20 quarters, using the following formula:
FV = PV * (1 + r) ⁿ
PV = Investment = US$ 2,000
rate (r) = 1.5% = 0.015
number of periods (n) = 20
Replacing with the real values, we have:
FV = 2,000 * (1 + 0.015) ²⁰
FV = 2,000 * 1.015 ²⁰
FV = 2,000 * 1.34685501
FV = US$ 2,693.71
