Anne invests $7,000 into a retirement account with a compound interest rate of 3.3% compounded quarterly. What is Anne’s final amount after 25 years of investment? Round the answer to the nearest cent.(1 point)
The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/borrowed for
Given:
A = ?
P = $7,000
r = 3.3% = 0.033 (decimal)
n = 4 (compounded quarterly)
t = 25 years
Plugging in the values, we can calculate the future value (A):
A = $7,000(1 + 0.033/4)^(4 * 25)
A = $7,000(1 + 0.00825)^(100)
A = $7,000(1.00825)^(100)
A ≈ $15,053.97
Therefore, Anne's final amount after 25 years of investment would be approximately $15,053.97.