A principal of $1800 is invested at 3.5% interest, compounded annually. How much will the investment be worth after 8 years?

Question

A principal of $1800 is invested at 3.5% interest, compounded annually. How much will the investment be worth after 8 years? Round your answer to the nearest dollar.

Answer 1

Use the compound interest formula:

A(t) = A₀·(1 + r/n)^nt

1. A(t) = amount after t years
2. A₀ = initial amount = $1800
3. r = interest rate in decimal form = 0.035
4. n = number of compoundings per year = annual = 1
5. t = years = 8

Plug the numbers into the formula and use your calculator to compute the answer