compounded- what would be the amount of compound interest on $12,000 invested for one year at 6%, compounded quarterly? round your answer to the nearest tenth. could you show me the work please ? i had $737.00 is that answer correct?
amount = 12000(1.015)^4
= 12736.36
so we gained 736.36 in interest
or 736.40 to the nearest tenth of a dollar
To calculate the compound interest on an investment, you can use the following formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
Let's calculate the compound interest on $12,000 invested for one year at 6% compounded quarterly.
P = $12,000
r = 6% (expressed as 0.06)
n = 4 (compounded quarterly)
t = 1
Plug these values into the formula:
A = 12000(1 + 0.06/4)^(4*1)
First, let's simplify the exponent:
A = 12000(1.015)^4
Next, calculate the value inside the parentheses:
A = 12000(1.06136)
Finally, calculate the final amount:
A = $12,736.32
To find the compound interest, subtract the initial investment amount:
Compound Interest = A - P
Compound Interest = $12,736.32 - $12,000
Compound Interest = $736.32
Therefore, the amount of compound interest on $12,000 invested for one year at 6%, compounded quarterly, is $736.32. Your answer of $737.00 is very close, but rounding to the nearest tenth would result in $736.30. So it seems there was a slight rounding error in your calculation.