In 20 years the investment will be worth $810.45.
What is compounding?
- Compound interest is the addition of interest to the principal sum of a loan or deposit or interest on interest plus interest.
- It is the result of reinvesting interest, or adding it to the loaned capital, rather than paying it out or requiring payment from the borrower, so that interest is earned on the principal sum plus previously accumulated interest in the following period.
- In finance and economics, compound interest is the norm.
To find how much will the investment be worth in 20 years:
Given -
- Initial investment = $300.
- Interest rate = 5%.
- Interest applied = quarterly.
So, the table of 20 years will be as follows:
(Refer to the table given below)
Therefore, in 20 years the investment will be worth $810.45.
Know more about compounding here:
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