Question

3. How much interest does $5300 earn at a rate of 2.8% interest compounded quarterly after 6

Answer 1

Answer:

The interest is $I=\ 74.46$

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=6/12=0.5\ years\\ P=\ 5,300\\ r=0.028\\n=4$  

substitute in the formula above  

$A=5,300(1+\frac{0.028{4})^{4*0.5}$

$A=5,300(1.007)^{2}$  

$A=\ 5,374.46$  

Find the interest

$I=A-P$

substitute

$I=\ 5,374.46-\ 5,300=\ 74.46$