Question

5000 12% compounded quarterly compound interest table find earned after 5 years

Answer 1

Amount earned after 5 years is $ 9030.5561

Solution:

The formula for compound interest, including principal sum, is:

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

A = the future value of the investment including interest

P = the principal investment amount

r = the annual interest rate in decimal

n = the number of times that interest is compounded per unit t

t = the time the money is invested

From given,

p = 5000

t = 5 years

`r = 12 \% = (12)/(100) = 0.12`

n = 4 ( since interest is compounded quarterly )

Substituting the values we get,

`A = 5000(1+(0.12)/(4))^(4 * 5)\\\\A = 5000(1+0.03)^(20)\\\\A = 5000 * 1.03^(20)\\\\A = 5000 * 1.806111\\\\A = 9030.5561`

Thus amount earned after 5 years is $ 9030.5561