Question

substitute the values to calculate the interest amount on a the loan using the compound interest formula.Principal: $4,000time: 10 yearsrate: 7%number of compounding periods: 4

Answer 1

The final amount calculated is $8006.40

Interest amount = $4006.40

Explanation:

Given that

Principal = $4, 000

Time = 10 years

rate = 7%

Number of compounding periods = 4

Using the formula below

`\begin{gathered} A\text{ = P ( 1 + }(r)/(n))^(nt) \\ A\text{ = 4000 ( 1 + }(0.07)/(4))^{4\cdot\text{ 10}} \\ A=4000(1+0.0175)^(40) \\ A=4000(1.0175)^(40) \\ A\text{ = 4000 }\cdot\text{ 2.00159} \\ A\text{ = \$8006.40} \end{gathered}`

The final amount calculated is $8006.40

Final amount = Interest + Principal

Interest = Total amount - Principal

Interest = 8006.40 - 4000

Interest amount = $4006.40