Question

Find the compound amount$12,500 at 12% compounded quarterly for 5 years

Answer 1

Use the compound interest formula:

`A=P(1+(r)/(n))^(nt)`

Where:

A = compound amount

P = $12,500

r = 12% = 0.12

For n, because we are compounding quarterly, we are compounding 4 times per year, so n = 4.

t = 5 years

Therefore, substitute the values:

`A=12500(1+(0.12)/(4))^(4\cdot5)`

Solve:

`\begin{gathered} A=12500(1+0.03)^(20) \\ A=12500(1.03)^(20) \\ A=22576.4 \end{gathered}`

Answer:

compound amount will be $22,576.4 in 5 years