Question

What is the final value of a $23,000 investment earning 4% interest after 3 months?

Answer 1

`$25871.87`

Explanation:

I assume you mean compound interest acquired monthly.

`A= A_0 ( 1 + r/100)^t`

• Under the assumption that you earn 4% each month...

`=> $23000*1.04^3`

`=>$ 25871.872` which would round to `color(red)($25871.87`

Answer 2

`$23,226.63`

Explanation:

Interest is assumed to be per year unless specifically stated as otherwise. Assuming monthly compounding of interest `4%` per annum is equivalent to:
`root(12)(1.04)-1=0.0032737397822=0.327...%` per month.

Final value after `3` monthly periods at this rate would be:
`color(white)("XXX")$23,000xx(1+0.00327...)^3=$23226.63`