Question

Sara wants to find the future value of a regular investment of $10000 that earns

6.25% compounded quarterly for 30 years. Find the value of Sara's investment.​

Answer 1

$64,269.65

Explanation:

Lets use the compound interest formula provided to solve this:

`A=P(1+(r)/(n) )^(nt)`

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 6.25% into a decimal:

6.25% ->
`(6.25)/(100)` -> 0.0625

Since the interest is compounded quarterly, we will use 4 for n. Lets plug in the values now:

`A=10,000(1+(0.0625)/(4))^(4(30))`

`A=64,269.65`

The value of Sara's investment after 30 years will be $64,269.65