SOLUTION: Peter deposits k450 000.00 with BSP which offers 4 1/2% per annum interest. Calculate the interest earned after 4 years if it is compounded every three months

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Question 1025531: Peter deposits k450 000.00 with BSP which offers 4 1/2% per annum interest. Calculate the interest earned after 4 years if it is compounded every three months
Answer by robertb(5830) About Me  (Show Source):
You can put this solution on YOUR website!
The amount, or future value of the deposit is given by the formula
A+=+P%2A%281%2Br%2Fn%29%5E%28nt%29.
In this case, P = 450,000, r = 4.5% = 0.045, n = 4 (quarterly!), and t = 4.
==> A+=+450000%2A%281%2B0.045%2F4%29%5E%284%2A4%29+=+538206.66.
==>Interest earned is K538,206.66 - K450,000 = K88,206.66