What would be the amount of compound interest on $8,000 invested for one year at 6%, compounded quarterly? Round your answer to the nearest dollar.
6%/4 = x%
$8,000./x%
Amount = 8000(1 + .06/4)^4
= 8490.91
y=3x-3.5
$491.00
To calculate the compound interest on an investment, you can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount (including both the principal and the interest)
P = the principal amount (the initial investment)
r = the annual interest rate (in decimal form)
n = the number of times the interest is compounded per year
t = the number of years
In this case, the principal amount (P) is $8,000, the annual interest rate (r) is 6% or 0.06, the interest is compounded quarterly (n = 4), and the time period (t) is 1 year.
Let's plug the values into the formula and calculate the compound interest:
A = 8000(1 + 0.06/4)^(4*1)
A = 8000(1 + 0.015)^4
A = 8000(1.015)^4
A ≈ 8000(1.061357)
A ≈ $8489.08 (rounded to the nearest cent)
To find the compound interest, subtract the principal amount from the final amount:
Compound Interest = A - P
Compound Interest ≈ $8489.08 - $8000
Compound Interest ≈ $489.08 (rounded to the nearest dollar)
Therefore, the compound interest on $8,000 invested for one year at 6%, compounded quarterly, is approximately $489.