Question

Find the accumulated value when $20,000.00 is invested for 10 years at 4.5% interest rate compounded quarterly.

Answer 1

To find the final amount, we just need to use those values in the compound interest formula, which is

`A=P(1+(r)/(n)_{})^(nt)`

Where A represents the final amount, P the principal(starting value), r the rate(written in decimals), n the number of times the interest is compounded, and t is the time.

We have

P = 20,000

r = 4.5% = 0.045

n = 4 (it is compounded quarterly)

t = 10

Evaluating those values in our equation, we have

`A=20000(1+(0.045)/(4))^(40)=31287.5373078\approx31287.54`

The accumulated value will be $31287.54.