Question

Find how much interests $15000 earns in 2 years in a certificate of deposit paying 7.5% interest compounded quarterly the interests earned in 2 years is

Answer 1

Answer:

Step-by-step explanation:

Initial amount deposited in the certificate of deposit is $15000 This means that the principal so

P = 15000

It was compounded quarterly. This means that it was compounded 4 times in a year. So

n = 4

The rate at which the principal was compounded is 7.5%. So

r = 7.5/100 = 0.075

It was compounded for 2 years. So

t = 2

The formula for compound interest is

A = P(1+r/n)^nt

A = total amount in the account at the end of t years. Therefore

A = 15000 (1+0.075/4)^4×2

A = 15000(1.01875)^8 = $17403

The interest would be

17403 - 15000 = $2403