Question

Find the interest earned given the following:Amount needed: $14,500Time in years: 3 1/2Interest: 8%Compounded: quarterly

Answer 1

To find the interest on the given sum compounded quarterly:

We will use the formula to obtain A (The amount that the sum will yield) first

$\begin{gathered} A=P(1+\frac{r}{100n})^{nt} \\ \text{where} \\ P=14,500 \\ r=8 \\ t=3.5 \\ n=4 \end{gathered}$

Thus

$A=14500(1+\frac{8}{100\times4})^{4\times3.5}$

Hence,

$A=\text{ \ 19132.44}$

Thus, the interest will be

$\begin{gathered} \text{Interest}=A-P \\ \text{Interest}=19132.44-14500 \\ \text{Interest}=\text{ \ 4632.44} \end{gathered}$

Thus, the interest is $4632.44