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
$8,981.92
$8,981.92
$4,702.27
$4,702.27
$4,681.92
$4,681.92
$4,712.18
$4,712.18
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To calculate the compound interest for an investment, you can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the initial principal (investment amount)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, the initial principal (P) is $4,300, the annual interest rate (r) is 3.7% or 0.037 as a decimal, the compounding period (n) is quarterly or 4 times per year, and the number of years (t) is 20.
Plugging these values into the formula:
A = 4300(1 + 0.037/4)^(4*20)
A = 4300(1 + 0.00925)^80
A = 4300(1.00925)^80
A ≈ $8,981.92
Therefore, the interest amount of the $4,300 investment after 20 years with a compound interest rate of 3.7% compounded quarterly is approximately $8,981.92.