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.)

Question

Quarter

Interest Earned

Balance

$2000.00
  
1  $    $    
2  $    $    
3  $    $    
4  $    $

Henry · Accepted Answer

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.