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.

Answer 1

The formula to find the final amount of an investment compounded quarterly is:

A = P(1 + r/n)^(nt)

Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or the loan is made for.

In this case, P = $15,000, r = 3.4%, n = 4 (compounded quarterly), and t = 27 years.

A = $15,000(1 + 0.034/4)^(4 * 27)

Using a calculator, the final amount is approximately $37,131.91.