Problema Solution
Andrea’s savings account has a balance of $3668. After 3 years, what will the amount of interest be at 4% compounded quarterly?
Answer provided by our tutors
P = $3668 the principal
t = 3 years
r = 0.04 or 4% annual rate
m = 4 compounding period per year
i = 0.04/4 = 0.01 interest rate per period
n = t*m = 3*4 = 12 total number of compounding periods
A = the future value
I = interest
A = P(1 + i)^n
A = 3668(1 + 0.01)^12
by solving we find:
A = $4,133.19
click here to see the step by step calculation:
I = A - P
I = $4,133.19 - $3,668
I = $465.19
the amount of interest will be $465.19.