Question

If $360 is invested at an interest rate of 4% per year and is compounded quarterly, how much will the investment be worth in 18 years? Use the compound interest formula A = P(1 r over n)nt. $175. 86 $422. 39 $430. 61 $736. 96.

Answer 1

The worth of investment in 18 years will be $1,096.96 after adding $736.96 of the interest amount compounded quarterly.

Computation:

Given,

$P$ Principal amount =$360

$r$ Interest rate =4%

$t$ Time period =18 years

The formula used to determine the compound interest amount is:

$A=P\times(1+r)^{n\times\;t}$

Substituting the values in the formula:

$\begin{aligned}A&=\ 360\times(1+0.04)^{4\times18}\\&=\ 360\times2.0471\\&=\ 736.96\end{aligned}$

Therefore, the correct answer for the worth of investment is $736.96.

To know more about compound interest, refer to the link:

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