$2790 is compounded quarterly at a rate of 5%. Find the total amount of compound interest earned at the end of 15 years. (The compound interest factor is 2.10718.)
2007-06-08 07:33:44 · 3 answers · asked by lizzie 1 in Science & Mathematics ➔ Mathematics
M = P( 1 + i )n
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.
2007-06-08 07:49:11 · answer #1 · answered by Melanie N 2 · 0⤊ 0⤋
I'm assuming that the nominal (annual) interest rate is 5%.
The annual effective interest rate is (1+r/m)^m-1 where r is the nominal rate (0.05) and m is the number of compounding periods/year (4).
So the effective interest rate is (1+o.05/4)^4 - 1 = .05095.
Then, the future amount is F = $2790(1+0.05095)^15 = $5879.43
2007-06-08 13:00:30 · answer #2 · answered by cvandy2 6 · 0⤊ 0⤋
(1.05)^15 = 2.078928
2.078928 - 1 = 1.078928
1.078928*2,790 = $3,010.21
2007-06-08 07:46:21 · answer #3 · answered by Helmut 7 · 0⤊ 0⤋