How much interest will be earned if $\$ 14000$ is invested for 4 years at $12 \%$ compounded quarterly?
Careful - the question is asking for the amount of INTEREST earned, not the total value of the investment.
Be sure to clearly show your work on your paper!
You would earn $\$$ in interest. (Round to 2 decimal places.)
Answer
The interest earned will be approximately \$8465.89.
Step 1 ：Define the variables where P is the principal amount which is $14000, r is the annual interest rate which is 12%, n is the number of times that interest is compounded per unit t, in this case, it is compounded quarterly so n is 4, and t is the time the money is invested for which is 4 years.
Step 2 ：Calculate the total amount A using the formula \(A = P \times (1 + \frac{r}{n})^{nt}\).
Step 3 ：Subtract the principal amount P from the total amount A to find the interest earned.
Step 4 ：Round the interest to 2 decimal places.
Step 5 ：The interest earned will be approximately \$8465.89.
