Question

find the compound interest earned. round to the nearest cent. $600 at 5% compounded quarterly for 1 1/2 years

Answer 1

$46.43

Explanation:

First, let's use the compound amount equation,

A = P(1+r/n)^(nt), where P is the principal, r is the annual interest rate as a decimal fraction, n is the # of compounding periods per year, and t is the number of years.

Here,

A = $600(1 + 0.05/4)^(4*[1 1/2]). Let's evaluate this:

A = $600*(1.0125)^6

= $646.43.

This is the amount due after 1.5 years if $600 were the original principal borrowed.

If you want ONLY the compound interest, subtract $600 from $646.43:

Compound interest was $46.43.