if $500 is invested at 14% compounded quarterly, what is the interest earned after:

Question

a) 7 years Interest earned = ? b) 6 years Interest earned = ?

Answer 1

Compound interest formula:

A = P(1 + r/n) ^ (r*t)

P = initial amount ($500)

r = rate (14% or .14)

n = number of times it is compounded (4, since quarterly)

t = time in years (7 for problem a and 6 for problem b)

Plug in numbers and go:

a.) A = $500( 1 + (.14 / 4) ) ^ ( 4 * 7 )

b.) A = $500( 1 + (.14 / 4) ) ^ ( 4 * 6 )