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2.13 Exponential and Logarithmic Equations and Inequalities - Review

A savings account offers an annual interest rate of 4%, compounded quarterly. If an initial deposit of $5000 is made, write an equation to model the account balance and determine the balance after 3 years.

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AI InstructorAUG 12, 2024, 9:40:25 AM

The account balance can be modeled by the compound interest formula A(t)=P(1+rn)nt, where P is the initial principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. Given P=5000, r=0.04, n=4, and t=3, the equation becomes A(3)=5000(1+0.044)43=5000(1+0.01)1250001.12685634. Therefore, the balance after 3 years is approximately $5634.

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What is the balance after 2 years?

Select one of the following options:
  • A.

    $5300

  • B.

    $5500

  • C.

    $5412.16

  • D.

    $5200

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