Problema Solution
Suppose that $2000 is loaned at the rate of 15%, compounded quarterly. Assuming that no payments are made, find the amount owed after 8 years.
Answer provided by our tutors
P = $2,000 the principal
r = 0.15 or 15% annual interest rate
t = 8 years
n = 4*t = 4*8 = 32 compounding periods (the account is compounded quarterly)
A = future value
A = P(1 + r/4)^n
A = 2000(1 + 0.15/4)^32
by solving we find:
A = $6,496.05
click here to see the step by step solution of the equation:
the amount owned after 8 years will be $6,496.05.