Question

Emily would like to buy some new

furniture for her home. She decides

to buy the furniture on credit with

9.5% interest compounded quarterly.

If she spent $7,400, how much total

will she have paid after 8 years.

Answer 1

$14,277.80

Explanation:

The standard formula for compound interest is given as;

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

Where;

A = final amount/value

P = initial amount/value (principal)

r = rate yearly

n = number of times compounded yearly.

t = time of investment in years

For this case;

P = $7,400

t = 8 years

n = 4 (quarterly)

r = 9.5% = 0.095

Using equation 1.

A = $7,400(1+0.095/4)^(4×7)

A = $7,400(1.02375)^(28)

A = $7,400(1.929432606035)

A = $14,277.80

final amount/value after 8 years A =$14,277.80

Answer 2

$15,683.28

Explanation:

formula for compound interest is: y= P(1+r/n)^nt

initial vaule= 7,400

N=4

T=8

R=0.095

New formula: y=7400(1+0.095/4)^4(8)

First step in answering (answer the parentheses first): Y=7400(1.02375)^32

Second step (multiply the new rate with the new exponet) Y=7400(2.11936263142)

Third/Final step (multiply everything together): y=$15,683.28