Question

Rochelle deposits $350 in an account that earns 6% annual interest, compounded quarterly. How much money will be in the account in 8 years?

350(1.06)^32 =2258.685339
Can anyone check what I'm doing is correct or not?

Janet deposits %150 every month in an account that earns 6% interest, compounded monthly. How long will it tak Janet to save up $8000?

Answer 1

no, since the 6% is compounded quarterly
you must divide .06 by 4
i = .06/4 = .015

so 350(1.015)^32

in the next one you would have to divide .06 by 12 to get i = .005

using the annuity formula
150( 1.005^n - 1)/.005 = 8000
(1.005^n -1)/.005 = 53.3333...
1.005^n - 1 = .26666...
1.005^n = 1.26666...

now we have to take logs and use the rules of logs
n log 1.005 = log 1.26666...
n = 47.396 months
= 3 years and appr 11 months

Answer 2

Thanks for replying me, Reiny!
I understand for the first one completely, but for the second one, did u use the annuity formula which is P[1-(1+r)^-n/r] ?? Because using (n-1) doesn't make sense to me..