Question

Bathsheba is saving up for the down payment on a farm. She invests $30000 at 5.2% interest, compounded quarterly, for 4 years. To the nearest tenth of a percent, Bathsheba's rate of return will be ____%.

Answer 1

P = Po(1+r)n

r = (5.2%/4)/100% = 0.013 = Quarterly %
rate expressed as a decimal.

n = 4comp/yr * 4yrs = 16 Compounding
periods.

P = 30,000(1.013)^16 = $36,886.92

((36886.92-30000)/30000) * 100% = 23%
Return rate.

Answer 2

Thank you!