Anne invests $7,000 into a retirement account with a compound interest rate of 3.3% compounded quarterly. What is Anne’s final amount after 25 years of investment? Round the answer to the nearest cent.
Anne’s final amount after 25 years of investment is $____
Wrong try again
The formula to calculate the final amount after compound interest is given by:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
Given:
P = $7,000
r = 3.3% = 0.033 (as a decimal)
n = 4 (compounded quarterly)
t = 25 years
A = 7000(1 + 0.033/4)^(4*25)
A = 7000(1 + 0.00825)^(100)
A = 7000(1.00825)^(100)
A ≈ 7000 * 1.835509
A ≈ $12,847.56
Therefore, Anne’s final amount after 25 years of investment is $12,847.56.
I apologize for the mistake. Let me recalculate it correctly.
To calculate the final amount with compound interest, we use the formula:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
Given:
P = $7,000
r = 3.3% = 0.033 (as a decimal)
n = 4 (compounded quarterly)
t = 25 years
A = 7000(1 + 0.033/4)^(4*25)
A = 7000(1 + 0.00825)^(100)
A ≈ 7000 * 1.540844
A ≈ $10,785.91
Therefore, Anne’s final amount after 25 years of investment is $10,785.91.