Question

Using the calculator below, substitute the values to calculate the interest amount on a the loan using the compound interest formula. Principal: $4,000 time: 10 years rate: 7% number of compounding periods: 4 What is the amount of the compound interest? (interest only)

a. 2,800
b. 4,757
c. 4,006
d. 59,897​

Answer 1

answer : c) 4,006




A = $8,006.39
A = P + I where
P (principal) = $4,000.00
I (interest) = $4,006.39

Step-by-step explanation:
First, convert R as a percent to r as a decimal
r = R/100
r = 7/100
r = 0.07 rate per year,

Then solve the equation for A
A = P(1 + r/n)nt
A = 4,000.00(1 + 0.07/4)(4)(10)
A = 4,000.00(1 + 0.0175)(40)
A = $8,006.39

Summary:
The total amount accrued, principal plus interest, with compound interest on a principal of $4,000.00 at a rate of 7% per year compounded 4 times per year over 10 years is $8,006.39.