Question

Use formula for compound amount to find the compound amount:$12,000 at 7% compounded annually for 4 years

Answer 1

Given:

Principal P=12000

Interest r = 7 % =7/100 = 0.07.

Time t= 4 years.

Compounded annually so n=1.

The formula for the compound amount is

$A=P(1+\frac{r}{n})^{nt}$

Substitute P=12000, r=0.07, t=4 and n=1, we get

$A=12000(1+\frac{0.07}{1})^{(1)(4)}$

$A=12000(1+0.07)^4$

$A=12000(1.07)^4$$A=15729.55212$

Hence the compound amount is $ 15729.55.