Question

Anisha invested $8,000 in an account that earns 10% interest How much money will she have in 15 years of the interest is compound quarterly

Answer 1

A = $35,198.32

Explanation:

Use the formula to calculate compound interest:

A = P(1 + i)ⁿ

"A" for total amount after the time period

"P" for principal, or starting money

"i" for the interest rate in a compounding period

To calculate "i":

i = r / c

"n" for the number of compounding periods

To calculate "n":

n = tc

So, we can combine the formulas into:

`A = P(1+(r)/(c))^(tc)`

"c" is the compounding periods in a year. (quarterly = 4)

We know:

P = 8000

r = 10% / 100 = 0.1

t = 15

c = 4

Substitute the information in the formula.

`A = P(1+(r)/(c))^(tc)`

`A = 8000(1+(0.1)/(4))^(15*4)` Solve "i" and "n"

`A = 8000(1+0.025)^(60)` Solve inside the brackets

`A = 8000(1.025)^(60)` Do the exponent before multiplying by 8000

A = 35198.318 Exact answer

A ≈ 35198.32 Round to two decimal places for money

Therefore she will have $35,198.32 after 15 years.