Question

HELP!

You plan to invest $350 in a growth fund that has a rate of 1.5% compounded quarterly. How much money will this investment be worth after 50 years?

Round to the nearest cent.

Answer 1

Answer: Hence, this investment would be worth of $366.756

Explanation:

Since we have given that

Amount he invests = $350

Rate of interest compounded quarterly = 1.5%

Number of years = 50 years = 1.25 quarters

As we know the formula for "Compound Interest ":

`Amount=P(1+(r)/(400))^n\\\\Amount=350(1+(1.5)/(400))^(12)\\\\Amount=\$366.07`

For remaining half year, we first find the interest with using the above amount as principal amount.

`Interest=(366.07\tiems 1.5* 0.5)/(4* 100)\\\\Interest=\$0.686`

Hence, this investment would be worth of

`366.07+0.686\\\\=\$366.756`

Answer 2

$740 after 50 years.

Explanation:

To solve this question we use the formula of compound interest :

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

Where A = Future amount

P = Principal amount ( $350 )

r = rate of interest 1.5% (0.015)

n = number of compounding in a year (4)

t = time in years (50 years)

Now put the values in the formula

`A=350(1+(0.015)/(4))^((4)(50))`

`A=350(1+0.00375)^(200)`

`A=350(1.00375)^(200)`

A = 350 × 2.114

A = $739.91 ≈ $740

Investment would be $740 after 50 years.