The interest is a) $7000
b) $17709.73
c) $18672.62
d) $18901.67
What is the formula for simple and compound interest?
Simple interest = (P× r× t)
Compound interest = P(1+r/n)^nt - P
We will find the interest as shown below:
P=$4,000
t=25 years
a) r=7%=0.07
Simple interest = (P× r× t)
= (4000×0.07×25)
= $7000
b) r=7%=0.07
Compound interest = P(1+r)^t - P
= 4000(1+0.07)^25-4000
= $17709.73056
rounding to nearest cents
= $17709.73
c) r=7%=0.07
n=4
Compound interest = P(1+r/n)^nt - P
= 4000(1+0.07/4)^(25*4)-4000
= $18672.62375
rounding to nearest cent
= $18672.62
d) r=7%=0.07
n=12
Compound interest = P(1+r/n)^nt - P
= 4000(1+0.07/12)^(25*12)-4000
= $18901.6728
rounding to nearest cent
= $18901.67
Hence, the interest is a) $7000
b) $17709.73
c) $18672.62
d) $18901.67
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