Rui Baldwin

2021-09-07

The amount owed at the end of 5 years.

An amount of

Clara Reese

Skilled2021-09-08Added 120 answers

Step 1

Formula used:

The compound interest formula,$A=P{(1+\frac{r}{n})}^{nt}$

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

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

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

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

$=3000{\left(1.025\right)}^{20}$

$\approx \mathrm{\$}4915.85}$

Thus, the amount owed is approximately$\mathrm{\$}4915.85}$ at the end of 5 years.

Formula used:

The compound interest formula,

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

Thus, the amount owed is approximately