the compound amount on an investment of $8,500 at 12% interest, compounded quarterly, for 1 year.
To calculate the compound amount on an investment, you can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = Compound amount (the final value of the investment)
P = Principal amount (the initial investment)
r = Annual interest rate (in decimal form)
n = Number of times interest is compounded per year
t = Time in years
In this case, we have:
P = $8,500
r = 12% = 0.12 (converted to decimal form)
n = 4 (compounded quarterly)
t = 1 year
Plugging the values into the formula, we have:
A = 8500(1 + 0.12/4)^(4*1)
Step 1: Simplify the exponent inside the parentheses:
A = 8500(1 + 0.03)^(4)
Step 2: Evaluate the exponent:
A = 8500(1.03)^(4)
Step 3: Perform the power calculation:
A = 8500(1.12551)
Step 4: Multiply the principal by the result:
A ≈ $9,564.29
Therefore, the compound amount on an investment of $8,500 at 12% interest compounded quarterly for 1 year is approximately $9,564.29.
P = Po(1+r)^n
Po = $8500
r = (12%/4)/100% = 0.03 = Quarterly %
rate expressed as a decimal.
n = 1yr * 4comp/yr. = 4 compounding
periods.
Plug the above values into the given Eq and sole for P.