Question

The basic equation for calculating compound intrest is A = P(1 + r/n)^(nt).

If $2,200 is invested at the intrest rate of 5% per year, compound quarterly, how much will the investment be worth at the end of 8 years? Show your work.

Answer 1

You would have $3,273.89 with an initial investment of $2,200 and 5% interest compounded quarterly.

A=P(1 + r/n)^(nt) = A=2200(1+0.05/4)^(4(8))= $3,273.89

V = the future value of the investment
P = the principal investment amount
r = the annual interest rate
n = the number of times that interest is compounded per year
t = the number of years the money is invested for