The amount owed at the end of 5 years. An amount of $3000 is loaned...

Rui Baldwin

Rui Baldwin

Answered question

2021-09-07

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

Answer & Explanation

Clara Reese

Clara Reese

Skilled2021-09-08Added 120 answers

Step 1
Formula used:
The compound interest formula, A=P(1+rn)nt
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%=10100=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+rn)nt
=3000(1+0.14)4×5
=3000(1+0.025)20
=3000(1.025)20
$4915.85
Thus, the amount owed is approximately $4915.85 at the end of 5 years.

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