ECONOMICS
COMPOUND INTEREST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
What principal will amount to $4500 if invested at 4% interest compounded quarterly for 5 years?
|
|
$3463.04
|
|
|
$3366.58
|
|
|
$3687.95
|
|
|
$3903.18
|
Explanation:
Detailed explanation-1: -So, Compound interest =CI=A−P=5445−4500=945.
Detailed explanation-2: -For example, 5% interest with quarterly compounding has an effective annual yield of (1 + . 05/4)^4-1 = . 0509 or 5.09%.
Detailed explanation-3: -Cq is the quarterly compounded interest. P would be the principal amount. r is the quarterly compounded rate of interest. n is the number of periods.
There is 1 question to complete.