Question

5000 12% compounded quarterly compound interest table find earned after 5 years

Answer 1

Amount earned after 5 years is $ 9030.5561

Solution:

The formula for compound interest, including principal sum, is:

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

A = the future value of the investment including interest

P = the principal investment amount

r = the annual interest rate in decimal

n = the number of times that interest is compounded per unit t

t = the time the money is invested

From given,

p = 5000

t = 5 years

$r = 12 \% = \frac{12}{100} = 0.12$

n = 4 ( since interest is compounded quarterly )

Substituting the values we get,

$A = 5000(1+\frac{0.12}{4})^{4 \times 5}\\\\A = 5000(1+0.03)^{20}\\\\A = 5000 \times 1.03^{20}\\\\A = 5000 \times 1.806111\\\\A = 9030.5561$

Thus amount earned after 5 years is $ 9030.5561