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suppose that 2000 is loaned at a rate of 16% compounded quarterly assuming that no payments are made find the amount owed after 8 years.

Answer :

The formula for compound interest is express as follows

[tex]\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ \text{where} \\ p=\text{ principal=2000} \\ t=8 \\ n=\text{ number of time interest is compounded per year} \\ r=annual\text{ interest rate decimal}=\frac{16}{100}=0.16 \\ A=2000(1+\frac{0.16}{4})^{4\times8} \\ A=2000(1+0.04)^{32} \\ A=2000(1.04)^{32} \\ A=2000(3.50805874685) \\ A=7016.11749369 \\ A=\text{ \$7016.12} \end{gathered}[/tex]