Question 70509
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.