Chris invests $15,000 in a retirement account with an annual interest rate of 3.4%. Find the final amount of the investment after 27 years if interest is compounded quarterly.
Round the answer to the nearest cent.
Would 37,558.7258768 be correct?
No, the correct answer should be rounded to the nearest cent. The final amount of the investment after 27 years, compounded quarterly, can be calculated using the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = final amount
P = principal investment amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years
Plugging in the given values, we have:
A = 15000(1 + 0.034/4)^(4*27)
Calculating this expression would give us:
A ≈ $37,558.73
Therefore, the correct answer when rounded to the nearest cent is $37,558.73.