00:01
In this question, you've given a $45 ,000, 8 % loan compounded quarterly over four years, and you're wondering how much interest will be included in the first payment.
00:25
First, we need to find the total amount of interest using the compounding formula.
00:29
The total amount of the loan equals the principal times 1 plus the interest rate over the number of times compounded per year, raised to the n again, times t, the number of years.
00:42
Principal, 45 ,000, times 1 plus the interest rate as a decimal.
00:48
It's compounded quarterly, so quarterly is 4, raised to 4 times 4 years.
00:56
And i can simplify this.
00:58
0 .08 divided by 4 would be 0 .02.
01:02
So we get 45 ,000 times 1 .02 raised to the power of 16.
01:12
And you type it in exactly how it looks with the parentheses...