Question

Find the value of 956$ deposited for 12 years in a account paying 6% anuale interest when it is...

1 compounded quarterly
2componded anualy

Answer 1

Answer:

1. $1953.57

2. $1923.66

Explanation:

Compounded interest amount formula:

A = P(1 + r/n)^(nt)

Given:

P = $956

r= 6% = 0.06

. t = 12 years

n = 4 and n = 1

1. Compounded quarterly

A = 956(1 + 0.06/4)^(4*12) = 956(1.015)^48 = 1953.57

2. Compounded annually

· A = 956(1+ 0.06)^12 = 1923.66

Answer 2

• 1. $1953.57
• 2. $1923.66

Explanation:

Compounded interest amount formula:

• A = P(1 + r/n)^(nt)

Given:

• P = $956
• r = 6% = 0.06
• t = 12 years
• n = 4 and n = 1

1. Compounded quarterly

• A = 956(1 + 0.06/4)^(4*12) = 956(1.015)^48 = 1953.57

2. Compounded annually

• A = 956(1 + 0.06)^12 = 1923.66