MATH

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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 -

    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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