Investment Calculation Consultation

How to calculate the final value of an investment with compound interest?

Given a principal of $1800 invested at 3.25% interest, compounded annually, what will the investment be worth after 12 years?

Calculation of Investment Worth

To calculate the final value of the investment with compound interest, we can use the formula:

A = P(1 + r/n)^(n*t)

Where:

A is the final value of the investment

P is the principal amount invested, which is $1800

r is the annual interest rate expressed as a decimal, which is 0.0325

n is the number of times the interest is compounded per year, which is once annually

t is the number of years the money is invested, which is 12 years

Plugging in the values, we get:

A = 1800(1 + 0.0325/1)^(1*12)

A = 1800(1.0325)^12

A = $2,499.74

Rounding this to the nearest dollar, we find that the investment will be worth $2,500 after 12 years.