Question

Suppose that you invest $3,000 at 6% interest, compound quarterly, for 5 years. use Table 11-1 to calculate the compound interest (in $) on your investment.

Answer 1

Year Year Interest Total Interest Balance

1 $184.09 $184.09 $3,184.09

2 $195.39 $379.48 $3,379.48

3 $207.38 $586.85 $3,586.85

4 $220.10 $806.96 $3,806.96

5 $233.61 $1,040.57 $4,040.57

Explanation:

Base amount: $3,000.00

Interest Rate: 6% (yearly)

Effective Annual Rate: 6.14%

Calculation period: 5 years