Question

On April 1, Preston McCord deposited $1,400 in a savings account that pays annual interest of 3.2%

compounded quarterly. If he made no deposits or withdrawals in the account, what interest could he
earn by keeping his money on deposit for 6 months?

Answer 1

After 6 months, the interest generated by the investment would be $21.10.

Explanation:

To determine the interest that Preston McCord could earn by investing $ 1,400 in an account that pays 3.2% annual interest compounded monthly, leaving said money invested for a period of 6 months, it is necessary to perform the following calculation:

X = 1,400 x (1 + 0.032 / 6) ^ 0.5x6

X = 1,421.10

1421.10 - 1400 = 21.10

Thus, after 6 months, the interest generated by the account will be $ 21.10.