Please help me with this question

Question

Find the amount:

 

a) $7200 at 12% p.a. over 4 years

 

b) $460 at 9% p.a. over 5 years

Answer 1

 $7200 at 12% p.a. over 4 years

 

I think the p.a. is "per annum" or 12% annual intetest

 

A = P(1+r/n)^nt

P = principal = 7200

r =interest rate = 12 % or .12 

n = number of times per year interest is compounded = 1

t = time in years = 4

 

A = 7200(1+.12/1)¹⁽⁴⁾

   = 7200(1.12)⁴

   = $11329.34

**********************************

 $460 at 9% p.a. over 5 years

 

A = 460(1+.05/1)¹⁽⁵⁾

   = 460(1.05)⁵

   = $587.09

 

 

Hope this helps. 

 

Note that the variable n changes with the periods

Interest compounded monthly would have n = 12

Compounded quarterly (4 times per year) then n = 4

Compounded semiannually (2 times per year) then n=2

and so forth.