Question

2. Suppose you obtain a $3,000 T-note with a 3% annual rate, paid quarterly, with maturity in 5 years. How much interest will you earn?

Answer 1

P = Po*(1+r)^n.

Po = $3,000.

r = (3%/4)/100% = 0.0075 = Quarterly %
rate expressed as a decimal.

n = 4Comp./yr. * 5yrs. = 20 Compounding
periods.

Solve for P.

I = P-Po.

Answer 2

67