Anny invests $8,500, at 6% interest, compounded quarterly for 12 years?
To find the future value of Anny's investment, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = future value
P = 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, Anny invests $8,500 at an annual interest rate of 6% (0.06), compounded quarterly for 12 years. So, we can plug in the values into the formula:
A = 8500(1 + 0.06/4)^(4*12)
Let's calculate it step by step:
First, we simplify the exponent calculation:
A = 8500(1 + 0.015)^(48)
Now, we add 1 to 0.015:
A = 8500(1.015)^(48)
Using a calculator, we raise 1.015 to the power of 48:
A ≈ 8500 * 1.9846504847
A ≈ 16892.28
Therefore, the future value of Anny's investment after 12 years would be approximately $16,892.28.
P = Po(1+r)^n
Po = $8,500
r = (6/4)/100 = 0.015 = Quarterly % rate
expressed as a decimal.
n = 4comp./yr. * 12yrs. = 48 Compounding
periods.
Solve for P.
I = P-Po