00:01
This problem says a company received a loan of $16 ,500 from a bank that was charging interest at a rate of 3 .72 % compounded quarterly.
00:13
Okay, got to pay attention to how it's compounded.
00:16
Your formula for compound interest is a, which is the accumulated amount, equals principal, open parentheses, 1 plus r over n to the nt power.
00:33
However, n is the number of times per year is going to be calculated because r is an annual percentage rate.
00:44
But you see the r they give me is already compounded quarterly.
00:49
They've already divided it by 4.
00:52
So i don't need these n's.
00:55
It's already calculated in the interest rate because it says a quarterly rate.
01:03
So the formula that i'm going to use is a equals p times 1 plus r to the t power.
01:13
Now, since r is a quarterly rate, t has to be in quarters.
01:20
Alright, r is an interest rate that is a quarterly rate.
01:29
So t has to be in quarters.
01:31
So let's look at the time here.
01:34
The time that they give me is 5 years and 9 months.
01:42
Quarterly means 4 times per year.
01:50
So if we've got 5 years, well quarterly, that's 20 quarters.
01:57
This is 20 quarters.
02:00
Since it's 4 times a year, well 9 months, that's 9 out of 12, which is 3 fourths.
02:12
And that fourth, that's the quarterly.
02:14
So that's 3 more quarters.
02:21
So we're talking about a time of 23 quarters...