Question

How many times per year is the interest calculated?

Picture of problem below, will give 100 points for answer.

Answer 1

4

Explanation:

The compound interest equation is ...

B(t) = P(1 + r/n)^(nt)

where r is the annual interest rate and n is the number of times per year it is compounded.

Comparing this general formula to the given equation, we see that ...

• P = 124
• r = .05 = 5%
• n = 4 . . . . (compounded quarterly, 4 times per year)
• t = (still a variable representing the number of years)