document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=850269>Question 850269</A>: <I><SPAN STYLE=\"word-break: break-all;\"> For a seven year period, Mike deposited $600 each quarter into an account paying 4.8% <BR>\n" );
document.write( "annual interest compounded quarterly. (Round your answers to the nearest cent.) <BR>\n" );
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document.write( " (a) How much money was in the account at the end of 7 years? Show work. <BR>\n" );
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document.write( " (b) How much interest was earned during the 7 year period?  </SPAN>\n" );
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document.write( "Formula:\r<BR>\n" );
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document.write( "P is the principal (the initial amount you borrow or deposit)<BR>\n" );
document.write( "r is the annual rate of interest (percentage)<BR>\n" );
document.write( "n is the number of years the amount is deposited or borrowed for.<BR>\n" );
document.write( "A is the amount of money accumulated after n years, including interest.<BR>\n" );
document.write( "When the interest is compounded once a year:<BR>\n" );
document.write( "A = P(1 + r)^<BR>\n" );
document.write( "n<BR>\n" );
document.write( "However, if you borrow for 5 years the formula will look like:<BR>\n" );
document.write( "A = P(1 + r)5<BR>\n" );
document.write( "This formula applies to both money invested and money borrowed.<BR>\n" );
document.write( "Frequent Compounding of Interest:<BR>\n" );
document.write( "What if interest is paid more frequently?<BR>\n" );
document.write( "Here are a few examples of the formula:<BR>\n" );
document.write( "Annually = P × (1 + r) = (annual compounding)<BR>\n" );
document.write( "Quarterly = P (1 + r/4)4 = (quarterly compounding)<BR>\n" );
document.write( "Monthly = P (1 + r/12)12 = (monthly compounding)\r<BR>\n" );
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document.write( "Use the formula Quarterly = P (1 + r/4)4 = (quarterly compounding) to find how much money in the account after 7 years. \r<BR>\n" );
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document.write( "To find how much interest after 7 years, use I = prt.\r<BR>\n" );
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