ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If you deposit $8000 into an account paying 7% annual interest compounded quarterly, how long until there is $12400 in the account?
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6.3 years exactly
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about 6.3 years
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about 6.2 years
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about 6.4 years
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Explanation:
Detailed explanation-1: -You would need to deposit $7007.08 to have $12000 in 6 years.
Detailed explanation-2: -Using the quarterly compound interest formula: A = P (1 + r / 4)4t.
Detailed explanation-3: -For example, 5% interest with quarterly compounding has an effective annual yield of (1 + . 05/4)^4-1 = . 0509 or 5.09%.
There is 1 question to complete.