Any invest $7000 into a retirement account with a compounded interest rate of 3.3% compounded quarterly what is Annie’s final amount after 20 years of investment round the answer to the nearest cent
To calculate Annie's final amount after 20 years of investment, we can use the formula for compound interest:
A = P (1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
Here, Annie's principal amount (P) is $7000, the annual interest rate (r) is 3.3% or 0.033, the number of times interest is compounded per year (n) is 4 (quarterly compounded), and the number of years (t) is 20.
Plugging in these values into the formula:
A = 7000(1 + 0.033/4)^(4 * 20)
A = 7000(1.00825)^(80)
Using a calculator or software to handle the power, we find that (1.00825)^(80) ≈ 1.776015.
A = 7000 * 1.776015
A ≈ $12,432.11
Therefore, Annie's final amount after 20 years of investment, rounded to the nearest cent, is $12,432.11.