Final answer:
To find the accumulated amount of a P900 investment at 4.50% weekly compound interest over 4 years, apply the compound interest formula A = P(1 + r/n)^(nt) where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years.
Step-by-step explanation:
To calculate the accumulated amount of a P900 investment with a 4.50% compound weekly interest rate over 4 years, use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (decimal).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for, in years.
In this question, P is P900, the annual interest rate (r) is 4.50% or 0.045 (in decimal), the number of times interest is compounded per year (n) is weekly, which is 52 times per year, and the time (t) is 4 years.
So the formula becomes:
A = 900 (1 + 0.045/52)^(52*4)
Calculating this will give us the accumulated amount after 4 years.
Compounding frequently, such as weekly, can have a considerable impact on the growth of the investment over time. Compound interest can lead to much larger sums than simple interest, especially with regular contributions and over a longer term. It's crucial to understand the power of compound interest, especially for long-term savings and investment strategies.