INVESTMENTS. Determine the amount of
an investment if $1000 is invested at an
interest rate of 8% compounded quarterly for
2 years.
To determine the amount of an investment with compound interest, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the final amount
P is the principal amount (initial investment)
r is the annual interest rate (written as a decimal)
n is the number of times the interest is compounded per year
t is the number of years
In this case, we have:
P = $1000
r = 8% = 0.08 (written as a decimal)
n = 4 (compounded quarterly, so 4 times a year)
t = 2 years
Substituting these values into the compound interest formula, we have:
A = 1000(1 + 0.08/4)^(4*2)
Now, let's calculate it step by step:
Step 1: Calculate the value inside the parentheses (1 + 0.08/4) = 1.02
Step 2: Calculate the exponent (4*2) = 8
Step 3: Calculate the final amount A = 1000 * 1.02^8
Now, using a calculator or a built-in function, we can find the final amount A.
A ≈ 1163.27
Therefore, the amount of the investment after 2 years of compounding quarterly at an interest rate of 8% is approximately $1163.27.
i = .08/4 = .02
n = 4*2 = 8
amount = 1000(1.02)^8 = .....