Find the accumulated amount A if the principal P is invested at the interest rate of r/year for t years.

Question

Find the accumulated amount A if the principal P is invested at the interest rate of r/year for t years.

P = $47,000 , r = 2.75% , t=8 , compounded quarterly

A=$______

any help or guidance would be greatly appreciated!

Answer 1

For compound interest, we have the formula:

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

where n is the number of times the principal amount is compounded per year (in this case n = 4 since its compounded quarterly). All the other variables are as you stated in the question. Now plug all the number in:

A = (47,000)(1 + (0.0275/4))⁽⁴⁾⁽⁸⁾

= (47,000)(1 + 0.006875)³²

= (47,000)(1.006875)³²

= 58,521.53

There you have it. The accumulated amount A = $ 58,521.53.