SOLUTION: Here is the formula used to find compound interest. In this situation, interest is compounded once a year: {{{ A = P(1 + r)^t }}} How would the formula change if the

Question 1140237: Here is the formula used to find compound interest. In this situation, interest is compounded once a year: How would the formula change if the interest were compounded 4 times in a year? Explain your changes.

A = Final Amount
P = Principal Amount (money deposited)
r = Annual rate on interest
t = Time (number of years)
Found 2 solutions by Alan3354, Theo:
Answer by Alan3354(69443) (Show Source): You can put this solution on YOUR website!
r --> r/4
t --> t*4
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the formula as you show it is:

A = P * (1 + r) ^ t

if the interest were compounded 4 times a year, the formula would become:

A = P * (1 + r/4) ^ (t * 4)

the annual interest rate is divided by 4 to get the quarterly interest rate.

the number of years is multiplied by 4 to get the number of quarters.

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