Question

suppose that 2000 is loaned at a rate of 16% compounded quarterly assuming that no payments are made find the amount owed after 8 years.

Answer 1

The formula for compound interest is express as follows

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ \text{where} \\ p=\text{ principal=2000} \\ t=8 \\ n=\text{ number of time interest is compounded per year} \\ r=annual\text{ interest rate decimal}=(16)/(100)=0.16 \\ A=2000(1+(0.16)/(4))^(4*8) \\ A=2000(1+0.04)^(32) \\ A=2000(1.04)^(32) \\ A=2000(3.50805874685) \\ A=7016.11749369 \\ A=\text{ \$7016.12} \end{gathered}`