P = Po(1+r)^n.
Po = $1,000,000.
r = (8%/4)/100% = 0.02 = Quarterly % .rate expressed as a decimal.
n 4Comp./yr. * 8trs = 32 Compounding
periods.
Plug the above values into the given Eq and solve for P.
I = P-Po.
Compute the amount of compound interest earned in 1 year for an investment of $1,000,000 with a nominal interest rate of 8% compounded quarterly.
2 answers
CORRECTION: n = 4Comp./yr. * 1yr. = 4
Compounding periods.
Compounding periods.
5 answers