SOLUTION: you deposit $600 in a savings account for 3 years. The account pays 8% annual interest compounded quarterly. a. What is the quartely interest rate? b. What is the number of payme

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Question 70509This question is from textbook
: you deposit $600 in a savings account for 3 years. The account pays 8% annual interest compounded quarterly.
a. What is the quartely interest rate?
b. What is the number of payment periods?
c. Find the final balance in the account. This question is from textbook

Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website!
you deposit $600 in a savings account for 3 years. The account pays 8% annual interest compounded quarterly.
Formula:
A(t) = P(1+r/n)^(nt)
A(t) is the value after t years
P is the original deposit
r is the annual interest rate
n is the number of times the money is compounded in a year
t is the number of years the investment has been compounding.
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a. What is the quartely interest rate?
=0.08/4 = 0.02
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b. What is the number of payment periods?
four per year for 3 years = 12 payment periods.
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c. Find the final balance in the account.
A(3)=600(1+0.2)^(4*3)
A(3)=600*1.02^12
A(3)=$760.95
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Cheers,
Stan H.