P1 = Po*(1+r)^n. Compounded annually.
r = 12%/100% = 0.12 = Annual % rate expressed as a decimal.
n = 1Comp./yr. * 4yrs. = 4 Compounding
periods.
P1 = 6,000*(1.12)^4 = $9441.12
P2 = Po*(1+r)^n. Compounded quarterly.
r = (12%/4)/100% = 0.03 = Quarterly %
rate.
n = 4Comp./yr. * 4yrs. = 16 Compounding
periods.
Plug the above values into the given Eq
and solve for P2.
P2-P1 =
Joanie takes a $6,000 loan to pay for her car. The annual interest reate on the loan is 12%. She makes no payments for 4 years, but has to pay back all the money she owes at the end of 4 years. How much more money will she owe if the interest compounds quarterly than if the interest compounds annually? Express your answer as a dollar value to the nearest cent.
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