document.write( "Question 1143336: Stan has a $18,200 certificate of deposit that earns 4.8% interest compounded quarterly for 5 years. What is the compound interest after 5 years? \n" ); document.write( "

Algebra.Com's Answer #764127 by Theo(13342) $\"\"$ $\"About$

You can put this solution on YOUR website!
formula for discrete compounding is f = p * (1 + r) ^ n\r
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\n" ); document.write( "\n" ); document.write( "f is the future value
\n" ); document.write( "p is the present value
\n" ); document.write( "r is the interest rate per time period
\n" ); document.write( "n is the number of time periods.\r
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\n" ); document.write( "\n" ); document.write( "your time periods are in quarters.\r
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\n" ); document.write( "\n" ); document.write( "p = 18,200
\n" ); document.write( "r = 4.8% / 4 = 1.2% per month / 100 = .012 per quarter.
\n" ); document.write( "the formula requires interest rate, not interest rate percent.
\n" ); document.write( "interest rate percent / 100 = interest rate.
\n" ); document.write( "n = 5 years * 4 = 20 quarters\r
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\n" ); document.write( "\n" ); document.write( "formula becomes f = 18200 * (1 + .012) ^ 20 = 23103.70539533.\r
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\n" ); document.write( "\n" ); document.write( "the interest earned is equal to f - p = 23103.70539533 - 18,200 = 4903.70539533.\r
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\n" ); document.write( "\n" ); document.write( "that's your solution.\r
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