Question

Ponce Leon has a principal of $900 in his savings account on October 1. The money earns an APR of 6.5% calculated quarterly as simple interest. What is the amount in the account on July 1 of the following year?

Answer 1

$914.63

Explanation:

use the formula intrest=principal*rate*time

principal = $900

rate= 6.5% converted into a decemial 0.065

time=4 (quartely)

Intrest = $900*0.065*4

Intrest=$914.63

Answer 2

In order to solve this problem you would put it into the formula for interest rate which is P(1+r/n). P is the amount of money in this case it is $900. r is the percentage as a decimal so in this case it would be 0.065. n is number of times that cost is paid in this case 4 since it is paid quarterly. So the formula is 900(1+0.065/4)=$914.625