Question

How much compound interest is earned on $11,250 principal, with an annual interest rate of 3% compounded annually, over 4 1/2 years?

compound interest: I = P (1 + r)t

A.
$1518.75

B.
$1600.50

C.
$12,869.55

D.
$12,850.50

Answer 1

@soprano.h.d0816

Answer 2

Nah Uh, hold it!

Answer 3

That isn't the formula for Compound interests, however, for BALANCE.

Answer 4

Correction:

B = P(1+ R)^T

Then, after we find the B, or balance, then we do


P - B = Compound Interest.

Answer 5

1: We plug it in the format:

$11,250(1+0.03 (or 3%) )^4.5

Lets do pemdas!

Answer 6

(1+ 0.03) = 1.03

1.03^4.5 = 1.14226668682


Now, we found out the parenthesis format so,

$11,250 x 1.14226668682 = $12850.5002267

Balance:
12850.5002267

Answer 7

We aren't done yet, subtract that by the principal!


So, 1600.5002267

(How I got it, 11,250 - $12850.5002267)

Answer 8

Round it,

$1,600.50

Your compound interest, my friend, is 1,600.50 dollars. Show your steps!

Answer 9

Undoubtedly, you might have more questions on this, remember the formulas:

Simple interest: P x R x T

Balance: P(1+r)^t

Compound interest: P(1+r)^t = B. B - P = Compound interest.

You get it @OpenStudier0 ?

Answer 10

yes

Answer 11

Thank you so much

Answer 12

:) No problem! Tag me if you need anymore assistance!