If $3800 is invested in a savings account for which interest is compounded quarterly, and if the $3800 turns into $4300 in 2 years, what is the interest rate of the savings account?

Answer 1

let the quarterly rate be i

then 3800(1+i)^8 = 4300
(1+i)^8 = 1.1315789....
take (1/8)th root , (exponent of 1/8)

1+i = 1.01557..
i = .01557...

annual rate is 4i = .06229

the rate is 6.229% per annum, compounded quarterly.

Answer 2

4300=3800(1+i/4)^4t where t is 2, solve for i.

43/38= (1+i/4)^8

take the log of each side

log43-log38=8(1+i/4)
solve for i.

Answer 3

I don't get it

Answer 4

107.80