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
$4,712.18
$4,712.18
$4,681.92
$4,681.92
$8,981.92
$8,981.92
$4,702.27
$4,702.27
To calculate the interest amount, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal investment amount ($4,300)
r = the annual interest rate (3.7% or 0.037 converted to decimal)
n = the number of times interest is compounded per year (quarterly, so 4)
t = the number of years (20)
Plugging in these values into the formula, we get:
A = 4300(1 + 0.037/4)^(4*20)
A = 4300(1 + 0.00925)^(80)
A = 4300(1.00925)^(80)
Using a calculator or spreadsheet, we can find that A ≈ $8,981.92.
So, the correct answer is $8,981.92.