Find the compound interest earned by the deposit. Round to the nearest cent.
-$\$ 4000$ at $1 \%$ compounded quarterly for $1 \frac { 1 } { 2 }$ year

Question

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. For this problem, $P = \$4000$, $r = 0.01$ (1% as a decimal), $n = 4$ (since interest is compounded quarterly), and $t = 1.5$ years. Plugging these values into the formula gives $A = 4000(1 + \frac{0.01}{4})^{4*1.5}$. Calculating this gives $A ≈ \$4060.38$. The compound interest earned is $A - P = \$4060.38 - \$4000 = \$60.38$.

Find the Compound Interest Earned by the Deposit $4000\$ 4000$4000 At 1%1 \%1%

Find the Compound Interest Earned by the Deposit $\$ 4000$ At $1 \%$