Logarithm-6

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Compute the compound interest on $ 4775 for 3-1/2 years at 8% compounded quarterly

Solution: A = P (1 + r)n, where A is the amount, P is the principal.

r = R/100, where R is the percentage rate of interest for period and n is the number of conversion periods.

Now, P = 4775; n = 14 since 3 years 6 months = 14 conversion periods of 3 months

r = 8 % per annum = 2 % per quarter

A = 4775 (1 + 0.02)14

log A = log 4775 + 14 log 1.02

= 3.6790 + 14 x 0.0086

= 3.7994

A = antilog 3.7994 = 6301

Interest = $ ( A - P) = $ (6301 - 4775) = $ 1526

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