Question

Using the chart, find the total amount and amount of interest paid in the following compound interest problems. $3,000 at 8% for 5 years.

Answer 1

Answer:

Annually: Total Amount $4,407.98, Interest Amount $1,407.98

Semi Annually: Total Amount $4,440.73, Interest Amount $1,440.73

Quarterly: Total Amount $4,457.84, Interest Amount $1,457.84

Answer 2

Answer:

The total amount paid was $3,828.85 and the amount of interest paid was $828.85

Step-by-step explanation:

The compound interest formula is given by:

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

Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.

In this problem, we have that:

$P = 3000, r = 0.05, n = 1, t = 5$

Total amount

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

$A = 3000(1 + \frac{0.05}{1})^{1*5}$

$A = 3,828.85$

Interest paid

A - P = 3,828.85 - 3,000 = 828.85

The total amount paid was $3,828.85 and the amount of interest paid was $828.85