Question

find compound interest: 16000 at 20 percent for 1 years compounded

Answer 1

annual interest rate = 20% / 100 = .2

number of compounding period per year is 4.

.2 / 4 = .05 interest rate per quarter.

16000 * 1.05 ^ 4 = 19448.1

general formula is f = p * (1 + r) ^ n

f is the future value

p is the present value

r is the interest rate per time period.

n is the number of time periods.

ij your problem the time period is quarters of a year.

the yearly interest rate is divided by 4 to get the quarterly interest rate.

the number of years is multiplied by 4 to get the number of quarters.