What are the future value and the interest earned if 3200 is

What are the future value and the interest earned if $3200 is invested for 4 years at 8% compounded quarterly? (Round your answers to the nearest cent)

Interest earned?

Future Value?

Solution

A = P[1 + (r/n)]^nt

P = principal amount (the initial amount you borrow or deposit)

r = annual rate of interest (as a decimal)

t = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after n years, including interest.

n  = number of times the interest is compounded per year

Future Value = A = 3200*[1 + 0.08/4]^4*4 = $4392.9

Interest earned = $4392.9 - $3200 = $1192.9