Question

Use the compound interest formulas to find the accumulated value of an investment of $900 at 12% compounded quarterly for 2 years.

A) $1,106.40
B) $1,016.40
C) $986.40
D) $1,045.60

Answer 1

To find the accumulated value of an investment using compound interest formulas, substitute the values into the formula A = P(1 + r/n)^(nt). In this case, the accumulated value is $1,138.79.

Step-by-step explanation:

To find the accumulated value of an investment using compound interest formulas, we can use the formula A = P(1 + r/n)^(nt), where A is the accumulated value, P is the principal amount, r is the interest rate, n is the number of times the interest is compounded per year, and t is the number of years. In this case, the principal amount is $900, the interest rate is 12%, the interest is compounded quarterly (n = 4), and the investment is for 2 years (t = 2).

Substituting the values into the formula, we have A = 900(1 + 0.12/4)^(4*2).

Calculating the exponent gives us A = 900(1 + 0.03)^8 = 900(1.03)^8 = 900 * 1.265319 = $1,138.79.