Given:
Principal = $54,000
Time = 9 years
Rate of compound interest = 12% per annum.
To find:
The compound interest.
Solution:
The formula for amount is:
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
Where, P is principal, r is the rate of interest in decimal, n is the number of time interest compounded and t is the number of years.
The interest is compounded annually, so [tex]n=1[/tex].
Substituting [tex]P=54000,\ t=9,\ n=1,\ r=0.12[/tex] in the above formula, we get
[tex]A=54000\left(1+\dfrac{0.12}{1}\right)^{1(9)}[/tex]
[tex]A=54000\left(1.12\right)^{9}[/tex]
[tex]A=149746.252902[/tex]
[tex]A\approx 149746.25[/tex]
The amount after 9 years is $149746.25.
Now, the compound interest is:
[tex]C.I.=A-P[/tex]
Where, C.I. is compound interest, A is amount and P is principal.
[tex]C.I.=149746.25-54000[/tex]
[tex]C.I.=95746.25[/tex]
Therefore, the compound interest is $95746.25.
