Question

Felix invested $2,800 at a rate of 3.4%, compounded quarterly. [HINT: Use the

Answer 1

The value of the investment after 5 years will be $3309.48.

What is compound interest?

Compound interest is the addition of interest to the principal sum of a loan or deposit or interest on interest plus interest.

In finance and economics, interest is the payment of an amount above the repayment of the principal sum by a borrower or deposit-taking financial institution to a lender or depositor at a specific rate by a borrower or depositor. It differs from a fee that the borrower may pay to the lender or a third party.

The value of the investment after 5 years will be,

$A = P[(1 + \dfrac{r}{100} )^{nt}]\\A = 2800[(1+0.034)^{5}$

A = $3309.48

Therefore, the value of the investment after 5 years will be $3309.48.

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