To calculate the interest amount of a compound interest investment, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times that interest is compounded per year
t = number of years
In this case:
P = $4,300
r = 3.7% = 0.037 (interest rate in decimal form)
n = 4 (quarterly compounding)
t = 20 (years)
Plugging in the values into the formula, we get:
A = 4300(1 + 0.037/4)^(4*20)
A = 4300(1 + 0.00925)^(80)
A = 4300(1.00925)^(80)
A = 4300(2.20888543)
A ≈ $9,504.19
To find the interest amount, we subtract the initial investment from the future value:
Interest = A - P
Interest = $9,504.19 - $4,300
Interest ≈ $5,204.19
Therefore, the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly is approximately $5,204.19.
So, none of the given options (O) are correct.
Calculate the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly (1 point)
O $8,981.92
O $4,702.27
O $4,712.18
O $4,681.92
1 answer