10% annual interest, compounded quarterly

Question

Calculate the amount of interest earned in 9 years on $16,000 deposited in an account paying 10% annual interest, compounded quarterly. (Round your answer to the nearest cent.)

$

Answer 1

To calculate the amount of interest earned, we can use the formula for compound interest:

𝐴=𝑃×(1+𝑟/𝑛)^𝑛𝑡

Given:

1. P = $16,000
2. 𝑟=10%
3. 𝑛=4 (compounded quarterly)
4. 𝑡=9 years

Now, let's plug in these values into the formula and calculate the amount of money accumulated after 9 years:

𝐴=16000×(1+0.10/4)^4×9

𝐴≈16000×2.204

𝐴≈35264

Now, let's find the amount of interest earned by subtracting the principal amount from the total accumulated amount:

Interest=𝐴−𝑃

Interest=35264−16000

= $19264

So, the amount of interest earned in 9 years on $16,000 deposited in an account paying 10% annual interest, compounded quarterly, is approximately $19264.