The amount owed at the end of 5 years.
An amount of $$ 3000$ is loaned at a rate of $10 %$ compounded quarterly.

Question

The amount owed at the end of 5 years. An amount of $3000 is loaned at a rate of 10%compounded quarterly.

Clara Reese · Accepted Answer

Step 1
Formula used:
The compound interest formula,

A = P {(1 + \frac{r}{n})}^{n t}

Here A is the amount after t years,
P is the principal amount,
r is the annual interest rate and n is number of periods the interest compounding.
Step 2
To find the amount owed at the end of 5 years, we will substitute

P = 3000, r = 10 % = \frac{10}{100} = 0.1, t = 5

in the above compound interest formula and solve for A. Since the interest rate is compounded quarterly, so we substitute

n = 4

. So, we get

A = P {(1 + \frac{r}{n})}^{n t}

= 3000 {(1 + \frac{0.1}{4})}^{4 \times 5}

= 3000 {(1 + 0.025)}^{20}

= 3000 {(1.025)}^{20}

\approx $ 4915.85

Thus, the amount owed is approximately

$ 4915.85

at the end of 5 years.

The amount owed at the end of 5 years.An amount

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