Respuesta :
Amount earned after 5 years is $ 9030.5561
Solution:
The formula for compound interest, including principal sum, is:
[tex]A = p(1+\frac{r}{n})^{nt}[/tex]
A = the future value of the investment including interest
P = the principal investment amount
r = the annual interest rate in decimal
n = the number of times that interest is compounded per unit t
t = the time the money is invested
From given,
p = 5000
t = 5 years
[tex]r = 12 \% = \frac{12}{100} = 0.12[/tex]
n = 4 ( since interest is compounded quarterly )
Substituting the values we get,
[tex]A = 5000(1+\frac{0.12}{4})^{4 \times 5}\\\\A = 5000(1+0.03)^{20}\\\\A = 5000 \times 1.03^{20}\\\\A = 5000 \times 1.806111\\\\A = 9030.5561[/tex]
Thus amount earned after 5 years is $ 9030.5561
