Question

The amount of an ordinary $9000.00 annuity for 3 years at 12 percent compounded quarterly is _______? Show Work

Answer 1

Answer:

A = $12831.8

Step-by-step explanation:

We know that the formula for compound interest is given by:

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

where $A$ is unknown which is the amount of investment with interest,

$P=9000$ which is the initial amount,

$r=12/100=0.12$ is the interest rate,

$n=4$ which is the number of compoundings a year; and

$t=3$ which is the number of times that interest is compounded per unit t.

So substituting these values in the above formula to find A:

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

$A=9000(\frac{1+0.12}{4} )^{(4.3)}$

$A = 9000(1 + 0.03)^{12}$

A = $12831.8

Answer 2

Answer:

The amount after 3 years = $12381.85

Step-by-step explanation:

Points to remember

Compound interest

A = P[1 +R/n]^nt

Where A - amount

P - principle amount

R = rate of interest

t - number of times compounded yearly

n  number of years

To find the amount

Here,

P = $9000.00, n = 3 years, t = 4, n = 3 and R = 12% = 0.12

A = P[1 +R/n]^nt

 = 9000[1 + 0.12/4]^(3 * 4)

 = 9000[1 + 0.03]^12

 = 12831.85

Therefore the amount after 3 years = $12381.85