Question

Find the compound interest $12,500 at 12% compounded quarterly for 5 years

Answer 1

Given:

$\begin{gathered} \text{ Principal Amount=12500} \\ \text{Interest rate=12\%} \\ \text{Compund quarterly} \\ \text{time = 5 year} \end{gathered}$

Formula of compound interest:

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

Where,

$\begin{gathered} A=\text{ Amount } \\ P=\text{ Principal} \\ n=\text{Number of time interest is compounded per unit }^{\prime}t^{\prime} \\ t=\text{ time} \\ r=\text{ interest rate} \end{gathered}$$\begin{gathered} P=12500 \\ r=\frac{12}{100} \\ r=0.12 \\ n=3 \\ t=5 \end{gathered}$$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=12500(1+\frac{0.12}{3})^{3\times5} \\ A=12500(1+0.04)^{15} \\ A=12500(1.04)^{15} \\ A=12500\times1.8009 \\ A=22511.79 \end{gathered}$

The final amount after 5 year is 22511.79