Question

At what interest rate must you invest $4500 to have $7,000 after 6 years, if the interest is compounded quarterly?

Answer 1

Answer:

The amount is $8358.7 and the interest is $3858.7.

Step-by-step explanation:

Explanation

STEP 1: To find amount we use formula:

A=P(1+rn)n⋅t

A = total amount

P = principal or amount of money deposited,

r = annual interest rate

n = number of times compounded per year

t = time in years

In this example we have

P=$4500 , r=7% , n=2 and t=9 years

After plugging the given information we have

AAAA=4500(1+0.072)2⋅9=4500⋅1.03518=4500⋅1.857489=8358.7

STEP 2: To find interest we use formula A=P+I, since A=8358.7 and P = 4500 we have:

A8358.7II=P+I=4500+I=8358.7−4500=3858.7