If Martin invests $20,000 for 20 years and his investment earns 20% interest compounding quarterly, what will it be worth at the end of his investment period?
Explanation
Answer: A - A $20,000 investment that earns 20% interest compounded quarterly would be worth $991,228.82 at the end of a 20-year investment period. The equation for compound interest is A = P(1 + r/n)nt in which A is the amount including interest, P is the principle investment, r is the interest rate expressed in decimal form (0.12), n is the number of times interest is added per year, and t is the number of years for which the principal is invested. A = $20,000(1+.2/4)80. = $991,228.82.
