SOLUTION: Can someone explain each step involved in figuring compound interest quarterly? I understand what each letter stands for and can plug the numbers into the formula. My problem c

Algebra ->  Probability-and-statistics -> SOLUTION: Can someone explain each step involved in figuring compound interest quarterly? I understand what each letter stands for and can plug the numbers into the formula. My problem c      Log On


   

Question 543690: Can someone explain each step involved in figuring compound interest quarterly?
I understand what each letter stands for and can plug the numbers into the formula. My problem comes when you get to the nt exponent. I do not understand that part of the problem.
For example: If you have $1500 earning 4.3% interest compounded quarterly, how much money will be there in 7 years?



Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
If you have $1500 earning 4.3% interest compounded quarterly, how much money will be there in 7 years?
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A(t) = P(1+(r/n))^(nt)
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Note: n*t is the number of times you are going to compound the money.
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Your Problem:
A(17) = 1500(1+(0.043/12))^(12*17)
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A(17) = 1500(1.00358)^(204)
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Note: 0.00358 is the interest rate per month.
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A(17) = 1500*2.0730
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A(17) = $3109.56
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Cheers,
Stan H.
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