Question

3. How much interest does $5300 earn at a rate of 2.8% interest compounded quarterly after 6

months??

Answer 1

The interest is
`I=\$74.46`

Explanation:

we know that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=6/12=0.5\ years\\ P=\$5,300\\ r=0.028\\n=4`

substitute in the formula above

`A=5,300(1.007)^(2)`

`A=\$5,374.46`

Find the interest

`I=A-P`

substitute

`I=\$5,374.46-\$5,300=\$74.46`