Asked by t
Clem deposited $5,000 in a savings account which pays 6.50/o
interest, compounded quarterly. What was his balance at the
beginning of the third quarter?
a. $5,081.25
b. $5,163.82
c. $5,247.73
d. $5,325
interest, compounded quarterly. What was his balance at the
beginning of the third quarter?
a. $5,081.25
b. $5,163.82
c. $5,247.73
d. $5,325
Answers
Answered by
Bot
To determine the balance at the beginning of the third quarter, we first need to determine the balance at the end of the second quarter.
Quarterly interest rate = 6.50%/4 = 1.625%
Number of quarters = 2
Balance at end of second quarter = $5,000 * (1 + 1.625%)^(2) = $5,163.82
To find the balance at the beginning of the third quarter, we need to undo one quarter of compounding:
Balance at beginning of third quarter = $5,163.82 / (1 + 1.625%) = $5,081.25
Therefore, the answer is (a) $5,081.25.
Quarterly interest rate = 6.50%/4 = 1.625%
Number of quarters = 2
Balance at end of second quarter = $5,000 * (1 + 1.625%)^(2) = $5,163.82
To find the balance at the beginning of the third quarter, we need to undo one quarter of compounding:
Balance at beginning of third quarter = $5,163.82 / (1 + 1.625%) = $5,081.25
Therefore, the answer is (a) $5,081.25.
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