Question

Find the compound interest and future value round your answer to the nearest cent do not round intermediate steps. Principal $560Rate 4.25%Compounded- Quarterly Time - 3 years

Answer 1

• The future value is $635.72

,

• The compound interest is $75.72.

Explanation:

To find the future value at compound interest, we use the formula below:

`A(t)=P(1+(r)/(k))^(nk)\text{ where }\begin{cases}P=\text{Principal Invested} \\ r=\text{Interest Rate} \\ k=\text{Number of compounding periods}\end{cases}`

Given:

• Principal, P= $560

,

• Rate, r = 4.25% =0.0425

,

• Period, k = 4 (Quarterly)

,

• Time, n = 3 years

Substitute these values into the formula:

`\begin{gathered} A(t)=560(1+(0.0425)/(4))^(4*3) \\ A(t)=\$635.72 \end{gathered}`

The future value is $635.72

Next, we find the compound interest:

`\begin{gathered} Interest=Future\text{ Value-Principal} \\ =635.72-560 \\ =\$75.72 \end{gathered}`

The compound interest is $75.72.