Question

If $360 is invested at an interest rate of 4% per year and is compounded quarterly, how much will the investment be worth in 18 years?Use the compound interest formula A = P(1 + r over n)nt.

Answer 1

The formula for compound interest is given below as

`\begin{gathered} A=P\left(1+(r)/(n)\right?^(nt) \\ P=money\text{ invested=\$360} \\ r=rate=4\% \\ n=number\text{ of times compounded=4} \\ t=time=18years \end{gathered}`

By substituting the values, we will have

`\begin{gathered} A=P\left(1+(r)/(n)\right?^(nt) \\ A=360\left(1+(4)/(400)\right?^(4*18) \\ A=360\left(1.01\right)^(72) \\ A=360*2.0471 \\ A=736.96 \end{gathered}`

Hence,

The total amount accrued, principal plus interest, with compound interest on a principal of $360.00 at a rate of 4% per year compounded 4 times per year over 18 years is $736.96.