Question

Find the interest earned given the following:Amount needed: $14,500Time in years: 2 1/2Interest: 8%Compounded: quarterly

Answer 1

Given:

The amount needed is, A= $14,500

Time in years is t=2.5 years

Interest is 8%

To find the interest when it is calculated under compounded quarterly:

Using the formula,

`\begin{gathered} A=P(1+(r)/(4))^(4t) \\ 14500=P(1+(0.08)/(4))^(4(2.5)) \\ 14500=P(1+0.02)^(10) \\ 14500=P(1.02)^(10) \\ P=(14500)/((1.02)^(10)) \\ P=$11,895.05$ \end{gathered}`

Thus, the principal is $11,895.05

Then, the interest earned is,

Amount-Principal =$2,604.95

Thus, the interest is $2,604.95.