Question

Calculate the compound interest on an investment of $45,000 at 6% interest, compounded quarterly, for 3 years.

Answer 1

Answer: $8802.82

Explanation:

The formula to find the compound amount if the interest is compounded quarterly :-

`A=P(1+(r)/(4))^(4t)`, where P is the principal amount, r is the rate of interest( in decimal )and t is time (in years).

Given : P=$45,000 ; r= 6%=0.06 and t= 3 years

Then,

`A=45000(1+(0.06)/(4))^(4*3)\\\\\Rightarrow\ A=45000(1.015)^(12)\\\\\Rightarrow\ A=53802.8177158\approx\$53802.82`

Now, The compound interest is given by :-

`I=A-P\\\\\Rightarrow\ I=53802.82-45000=\$8802.82`

Hence, the compound interest = $8802.82