Answer to Question #171399 in Financial Math for King

Question

Compound Amount

(a) what is the simple interest on $30,000 for six months at a simple interest rate of 12%?

(b) what is the compound interest if the same investment is compounded quarterly? (c) Obtain the difference.

Answer 1

0:47

a) I=PRT/100

$ 30000 x 12% x 0.5

$ 1800

b) P(1+r%)ⁿ

$30000(1+0.12/4)⁴

=$ 33765.26

I= A-P

$33765.26-$30000

= $ 3765.26

c) difference

=$3765.26-1800

= $ 1965.26