Calculate the interest amount of a $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly.(1 point)
Responses
$4,712.18
$4,712.18
$4,702.27
$4,702.27
$4,681.92
$4,681.92
$8,981.92
To calculate the compound interest, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
For this problem, P = $4,300, r = 3.7% or 0.037 as a decimal, n = 4 (compounded quarterly), and t = 20.
Plugging in the values:
A = $4,300(1 + 0.037/4)^(4*20)
A = $4,300(1 + 0.00925)^(80)
A = $4,300(1.00925)^(80)
Using a calculator, we find that A ≈ $8,981.92.
Therefore, the correct answer is $8,981.92.