The formula for compound interest is given by:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case:
P = $15,000
r = 3.4% or 0.034
n = 4 (quarterly compounding)
t = 27 years
Substituting the values into the formula, we have:
A = 15000(1 + 0.034/4)^(4*27)
A ≈ 15000(1 + 0.0085)^(108)
A ≈ 15000(1.0085)^108
A ≈ 15000(2.208756602)
A ≈ $33,131.35
Therefore, the final amount of the investment after 27 years with quarterly compounding is approximately $33,131.35.
Chris invests $15,000 in a retirement account with an annual interest rate of 3.4%. Find the final amount of the investment after 27 years if interest is compounded quarterly.
Round the answer to the nearest cent.(1 point)
1 answer