The formula to calculate compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment/loan amount
r = the annual interest rate (in decimal form)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/borrowed for
In this case:
P = $4,300
r = 3.7% or 0.037 (as a decimal)
n = 4 (compounded quarterly)
t = 20
Now let's calculate the interest amount:
A = 4300(1 + 0.037/4)^(4*20)
A = 4300(1 + 0.00925)^(80)
A = 4300(1.00925)^(80)
A ≈ 4300(1.9403291158690103)
A ≈ 8369.41
The future value of the investment after 20 years would be approximately $8,369.41.
Therefore, the interest amount would be:
Interest amount = A - P
Interest amount = 8369.41 - 4300
Interest amount ≈ $4,069.41
So the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly would be approximately $4,069.41.
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 answer
1 answer