Question

Calculate the amount of interest that will be charged on $8500.00 borrowed for 6 months at 5.25%.

Answer 1

A = $8,725.58

P (principal) = $8,500.00

I (interest) = $225.58

Explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 5.25/100

r = 0.0525 rates per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 8,500.00(1 + 0.0525/12)(12)(0.5)

A = 8,500.00(1 + 0.004375)(6)

A = $8,725.58

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $8,500.00 at a rate of 5.25% per year compounded 12 times per year over 0.5 years is $8,725.58.