Posted by **Benjie** on Wednesday, June 18, 2008 at 3:29pm.

What would be the amount of coumpound interest on $8,000 invested for one year at 6%,compounded quaterly? Round your answer to the nearest dollar

- MATH -
**tchrwill**, Wednesday, June 18, 2008 at 3:46pm
The compound interest derives from

I = P[(1 + i)^n - 1] where P = the amount invested, i = the decimal equivalant of the periodic interest rate and n = the number of interest bearing periods.

Therefore, P = 8000, i = 6/100(12) = .015 and n = 4.

I = 8000[(1 + 6/100(4))^4 - 1]

I = 8000[1.015^4 - 1]

I = 8000[1.06136 - 1] = $490.91 = $491

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