Question

Nathan invested $18,000 in an account paying an interest rate of 3.4% compounded quarterly. Assuming no deposits or withdrawals are made, how much money, to the nearest dollar, would be in the account after 9 years?

Answer 1

$24,412

Explanation:

To find out the value after 9 years, we have to use Future value formula.

Here, Present Value (PV) = $18,000

Interest rate, r = 3.4% = 0.034

Since the interest is compounding quarterly, m = 4

years, n = 9

We know, FV = PV x [(1 + r/m)^(n*m)]

FV = $18,000 x [(1 + 0.034/4)^(9*4)]

FV = $18,000 x [(1 + 0.034/4)^(9*4)]

FV = $18,000 x 1.3562

FV = $24,412

Therefore, the future value is $24,412.