Problema Solution
Stan's savings account has a balance of $4706. After 4 years, what will the amount of interest be at 4% compounded quarterly?
Answer provided by our tutors
P = $4706 the principal
r = 0.04 or 4% annual interest rate
t = 4 years
m = 4 compounding period per year
i = r/m = 0.04/4 = 0.01 interest rate per period
n = t*m = 4*4 = 16 total number of compounding periods
A = future value
I = interest
A = P(1 + i)^n
A = 4706(1 + 0.01)^16
A = $5,518.16
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I = A - P
I = 5518.16 - 4706
I = $812.16
the amount of interest will be $812.16.