Question

Molly Slate deposited $35,000 at Quazi Bank at 6% interest compounded quarterly.

a.) What is the effective rate (APY) to the nearest hundredth percent?

b.)What will Molly’s balance be in a year?

Answer 1

a) The effective multiplier each year is
(1 +r/n)^n = (1 +.06/4)^4 = 1.061363550625
Then the effective rate is the percentage that is added to 1 to get this number,
6.14%

b) The year-end balance will be
$35,000*1.061363550625 ≈ $37,147.72