How much money will you have in 7 years if you invest %16,000 at a 6.3% annual rate of interest compounded quarterly?

Question

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

Answer 1

Hello, thank you for taking the time to post your question!

Because it’s quarterly compounding, the underlying formula that you want to use here is

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

For this scenario we want to plug in P = 16000, r = 0.063, t = 7, n = 4 and then solve for the value of A

A = 16000 * (1 + 0.063/4)^(4*7)

A = 24,782.85

Meaning that the investment will be worth $24,782.85 in 7 years with these underlying parameters

I hope that helps you get moving in a better direction on this type of question! Feel free to reach out if you have any additional questions beyond that :)

Answer 2

Hi Amber,

 

You already provided the formula. Because the interest is compounded quarterly, n = 4.

t = 7 years

r = 0.16 (annual rate of interest as a decimal)

I think you can solve the question now.

The answer should be $47979 (rounded to the nearest whole number).