Question

How much interest would you pay if you borrow AED 16800 at 4.09 % per annum compounded quarterly for 2 years?

Answer 1

First, convert R as a percent to r as a decimal

P= AED 16800

t= 2 year

n =4 (quarterly)

r = R/100 per annum

or,r = 4.09/100 per annum

or,r = 0.0409 rate per annum

Then solve the equation for interest

I = P(1 + r/n)nt

or,I= AED16,800.00(1 + 0.0409/4)4×2-ADE16800

or,I= AED16,800.00(1 + 0.010225)8 -AED16800

or,I = AED18,224.44 -AED16800

= ADE1,424.44

AED1424.44 intereste would to be pay.

Then solve the equation for interest

I = P(1 + r/n)nt

or,I= AED16,800.00(1 + 0.0409/4)4×2-ADE16800

or,I= AED16,800.00(1 + 0.010225)8 -AED16800

or,I = AED18,224.44 -AED16800

      = ADE1,424.44

AED1424.44 intereste would to be pay.