Asked by Erin
Suppose you put $2000 in a savings account at an APR of 8% compounded quarterly. Fill in the table below. (Calculate the interest and compound it each quarter rather than using the compound interest formula. Round your answers to the nearest cent.)
Quarter
Interest Earned
Balance
$2000.00
1 $ $
2 $ $
3 $ $
4 $ $
Quarter
Interest Earned
Balance
$2000.00
1 $ $
2 $ $
3 $ $
4 $ $
Answers
Answered by
Henry
r = 0.08/4 = 0.02 = Quarterly % rate expressed as a decimal.
I1 = P1*r*t = 2000*0.02*1 = $40.00
I2 = P2*r*t = 2040*0.02*1 = $40.80
I3 = P3*r*t = 2080.80*0.02*1 = $41.62
I4 = P4*r*t = 2122.42*0.02*1 = $42.45
Bal. = 2000 + 164.87 = 2164.87.
I1 = P1*r*t = 2000*0.02*1 = $40.00
I2 = P2*r*t = 2040*0.02*1 = $40.80
I3 = P3*r*t = 2080.80*0.02*1 = $41.62
I4 = P4*r*t = 2122.42*0.02*1 = $42.45
Bal. = 2000 + 164.87 = 2164.87.