Question

Find the final amount. ​$4000 invested at 11​% APR compounded quarterly for 5 years The final amount is ​$ nothing. ​(Do not round until the final answer. Then round to the nearest hundredth as​ needed.

Answer 1

The final amount is $ 6881.71

Solution:

The formula for compound interest, including principal sum, is:

$A = p(1 + \frac{r}{n})^{nt}$

Where,

A = the future value of the investment

P = the principal investment amount\

r = the annual interest rate in decimal

n = the number of times that interest is compounded per unit t

t = the time the money is invested

From given,

p = 4000

t = 5

$r = 11 \% = \frac{11}{100} = 0.11$

n = 4 ( compounded quarterly )

Substituting the values in formula,

$A = 4000(1 + \frac{0.11}{4})^{4 \times 5}\\\\ A = 4000( 1.0275)^{20}\\\\A = 4000 \times 1.720428\\\\A = 6881.7137 \approx 6881.71$

Thus the final amount is $ 6881.71