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)
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 or initial amount
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
For this case:
P = $4,300
r = 3.7% = 0.037
n = 4 (compounded quarterly)
t = 20
A = 4300(1 + 0.037/4)^(4*20)
A = 4300(1 + 0.00925)^(80)
A ≈ 4300(1.00925)^(80)
A ≈ 4300(2.20804020702)
A ≈ $9,508.87
The interest amount would be the future value of the investment minus the initial amount invested:
Interest = A - P
Interest = $9,508.87 - $4,300
Interest ≈ $5,208.87
Therefore, the interest amount of the $4,300 investment for a period of 20 years with a compound interest rate of 3.7% compounded quarterly would be approximately $5,208.87.