Compound Interest Calculation: Let's See Nancy's Account Balance in 24 Years!
What will Nancy's account balance be in 24 years if she invests $27,000 in an account paying 7.25% interest compounded weekly?
a. $151,450.09
b. $153,641.97
c. $153,801.70
d. $153,025.06
Final Answer:
Nancy's account balance in 24 years will be approximately $153,801.70.
To calculate the future value of an investment with compound interest, we use the formula:
A = P(1 + r/n)nt
Where:
- A is the future value of the investment
- P is the principal amount (initial investment)
- r is the annual interest rate (in decimal form)
- n is the number of times that interest is compounded per year
- t is the number of years
In this case, Nancy is investing $27,000 at an interest rate of 7.25%, compounded weekly for 24 years. Plugging in the values into the formula:
A = $27,000(1 + 0.0725/52)(52*24) ≈ $153,801.70
Therefore, Nancy's account balance in 24 years will be approximately $153,801.70. It's amazing how compound interest can grow investments over time!