Question

Tom Blasting invested $4,500 in an investment paying 8% compounded quarterly for 3 years. Find the interest

Answer 1

Remember that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

In this problem we have

P=$4,500

r=8%=0.08

n=4

t=3 years

substitute the given values in the formula

`A=4,500(1+(0.08)/(4))^(4\cdot3)`
`\begin{gathered} A=4,500(1.02)^(12) \\ A=\$5,707.09 \end{gathered}`

Find out the interest

I=A-P

I=5,707.09-4,500

I=$1,207.09