Question

Find the compound amount for the deposit and the amount of interest earned. $7600 at 8 % compounded quarterly for 8 years. The compound amount after 8 years is?

(Do not round until the final answer. Then round to the nearest cent as needed.)

The amount of interest earned is

(Do not round until the final answer. Then round to the nearest cent as needed.)

Answer 1

Ans:- In this question, we need to find the Future Value by compound interest and interest earned.

(a) FV = Present Value*(1+r/m)^m*n, where r is the annual rate, m is the number of times compounding per year and n is the number of years.

PV = $7,600, r=8%, m=4 (Since it is compounded quarterly), n=8 years.

FV=$7,600*(1+8%/4)^(8*4) = $14,322.51.

(b) Interest earned will be calculated by Final Amount or Future Value - Amount Invested

=$14,322.51 - $7,600 = $6,722.51.

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