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anonymous

  • one year ago

How much compound interest is earned on $4300 at 2.9% interest for 10 years, compounded quarterly? Give your answer in dollars and cents. Don’t forget to subtract P from A. Compound Interest

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  1. anonymous
    • one year ago
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  2. wolf1728
    • one year ago
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    Total Amount = Principal * (1 + rate/number cmpdg periods)^n*t Total Amount = 4,300 * (1 + .029/4)^4*10 Total Amount = 4,300 * (1.00725)^40 Total Amount = 4,300 * 1.3350300535 Total Amount = 5740.6292299865 Rounds to 5740.63 Calculator to test the answer: http://www.1728.org/compint.htm

  3. anonymous
    • one year ago
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    im sorry but i dont get it :(

  4. wolf1728
    • one year ago
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    Gee, I followed the formula you posted. Guess I'll explain some more.

  5. wolf1728
    • one year ago
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    The first thing is to calculate the quarterly compounded rate after 10 years compounding (1 + rate/4) ^ 4*10 do you understand that?

  6. wolf1728
    • one year ago
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    The rate is 2.9% but to use it in a formula we need to use it as .029

  7. anonymous
    • one year ago
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    ohhh okay, i guess i just needed it broken down?

  8. wolf1728
    • one year ago
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    Total = Principal * (1 + .029/4) ^ 4 *10

  9. anonymous
    • one year ago
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    and it equals 5740.63

  10. wolf1728
    • one year ago
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    Yes it does!

  11. wolf1728
    • one year ago
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    Do you see why we need to convert the 2.9 % to .029?

  12. anonymous
    • one year ago
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    yes I do! thanks for explaining

  13. wolf1728
    • one year ago
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    okay You are welcome :-)

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