Calculate the compound interest on 7400 in 4years at 6percent p.a if the Interest is calculated every 3months
To calculate the compound interest on 7400 over 4 years with an interest rate of 6% per annum, calculated quarterly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years
In this case, the principal P is 7400, the interest rate r is 6% (or 0.06 as a decimal), n is 4 (since interest is calculated quarterly), and t is 4 (as it's a 4-year period).
Plugging these values into the formula:
A = 7400(1 + 0.06/4)^(4*4)
A = 7400(1 + 0.015)^(16)
A = 7400(1.015)^(16)
A ≈ 7400(1.274)
A ≈ 9427.60
Therefore, the compound interest on 7400 over 4 years, with an interest rate of 6% p.a. calculated quarterly, is approximately 9427.60.
To calculate the compound interest on an amount, we'll use the formula:
A = P(1 + r/n)^(nt)
Where:
A = The future value of the investment/loan, including interest
P = The principal investment/loan amount
r = Annual interest rate (decimal)
n = Number of times that interest is compounded per year
t = Number of years
In this case, the principal investment (P) is $7400, the annual interest rate (r) is 6% or 0.06 (expressed as a decimal), the interest is calculated every 3 months, so the compounding frequency (n) is 4 (since there are 4 quarters in a year), and the time period (t) is 4 years.
Plugging these values into the formula, we can calculate the compound interest (A):
A = 7400(1 + 0.06/4)^(4*4)
Step 1: Calculate the interest rate per compounding period: 0.06/4 = 0.015.
Step 2: Calculate the compounding factor: (1 + 0.015)^(4*4) = 1.2852 (rounded to 4 decimal places).
Step 3: Calculate the future value: A = 7400 * 1.2852 = $9505.04.
Therefore, the compound interest on $7400 in 4 years at a 6% annual interest rate, with interest calculated every 3 months, is approximately $9505.04.