Question

Use the formula for compound amount to find the compound amount:$28,000 at 9% compounded quarterly for 1 year

Answer 1

Solution:

Given:

$\begin{gathered} P=\text{ \ 28,000} \\ r=9\text{ \% = }\frac{9}{100}=0.09 \\ t=1\text{year} \\ n=4 \end{gathered}$

To get the compound amount, we use the compound interest formula;

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

Substituting the given values into the formula;

$\begin{gathered} A=28000(1+\frac{0.09}{4})^{4\times1} \\ A=28000(1+0.0225)^4 \\ A=28000(1.0225)^4 \\ A=28000\times1.0225^4 \\ A=\text{ \ 30,606.33} \end{gathered}$

Therefore, the compound amount is $30,606.33