Question

If $14,000 is invested at 8% interest compounded quarterly, find the interest earned in 12 years.

Answer 1

Using the compound interest formula:

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

Where:

P = Principal = $14000

r = interest rate = 8% = 0.08

t = time = 12

n = Number of times interest is compounded = 4

Therefore:

$\begin{gathered} A=14000(1+\frac{0.08}{4})^{4\cdot12} \\ A=36218.99 \end{gathered}$