Answer: Amount in 5 years( if compounded quarterly) = $11,768.40
Amount in 5 years( if compounded monthly = $11782.54
Step-by-step explanation:
Formula for accumulated amount in t years at annual rate of r% compounded quarterly: [tex]A=P(1+\dfrac{r}{4})^{4t}[/tex]
Formula for accumulated amount in t years at annual rate of r% compounded monthly: [tex]A=P(1+\dfrac{r}{12})^{12t}[/tex], where P= principal amount.
Given: P= $9000, r= 5.4%= 0.054, t= 5 years
Amount in 5 years if compounded quarterly =[tex]9000(1+\dfrac{0.054}{4})^{4\times5}[/tex]
[tex]=9000(1.0135)^{20}\\\\=9000(1.30760044763)\approx11768.40[/tex]
i.e. Amount in 5 years( if compounded quarterly) = $11,768.40
Amount in 5 years if compounded monthly =[tex]9000(1+\dfrac{0.054}{12})^{12\times5}[/tex]
[tex]=9000(1.0045)^{60}\\\\=9000(1.309171267)\approx11782.54[/tex]
i.e. Amount in 5 years( if compounded monthly = $11782.54
