Find the amount of the following investment: P=28,000, 10% per year compounded quarterly for 8 years

Question

Find the amount of the following investment: P=28,000, 10% per year compounded quarterly for 8 years

Answer 1

The underlying formula that you want to use here for compound interest is

A = P(1 + r/n)^(nt) , where

P = principal amount = $28,000

r = annual interest rate = 0.10

n = number of compounds per year = 4

t = number of years = 8

plugging in the values yields

A = 28000(1 + 0.10/4)^(4*8)

A = 28000(1.025)^32

A = 61,705.19

so the value in the account after 8 years is $61,705.19