Calculate the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly.(1 point)
Responses
$4,681.92
$4,681.92
$4,702.27
$4,702.27
$8,981.92
$8,981.92
$4,712.18
To calculate the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the future value of the investment
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
In this case, P = $4,300, r = 3.7% = 0.037 in decimal form, n = 4 (quarterly compounding), and t = 20.
Substituting these values into the formula:
A = 4300(1 + 0.037/4)^(4*20)
= 4300(1 + 0.00925)^(80)
= 4300(1.00925)^(80)
≈ 4,702.27
Therefore, the interest amount for this investment after 20 years would be approximately $4,702.27. So the correct answer is $4,702.27.