An investor puts $3,000 into a life insurance policy that pays 7.5% sample annual interest if no additional investments is made into the policy how much accumulated interest should the investor expect at the end of the 9 years
To calculate the accumulated interest, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount (accumulated interest)
P = the principal amount (initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case,
P = $3,000
r = 0.075
n = 1 (since interest is compounded annually)
t = 9
Plugging in these values, the formula becomes:
A = 3000(1 + 0.075/1)^(1*9)
= 3000(1 + 0.075)^9
= 3000(1.075)^9
Calculating this expression, the accumulated interest should be approximately $4,973.11.