Question 1170313
formula to use is f = p * (1 + r) ^ n
f is the future value
p is the present value
n is the number of time periods
r is the interest rate per time periods.


your inputs are:
f = 40,800 (= 40,000 + 800 interest)
p = 40,000
n = 2 year * 4 quarters per year = 8
r = what you want to find


formula becomes 40,800 = 40,000 * (1 + r) ^ 8
divide both sides of the equation by 40,000 to get:
40,800/40,000 = (1+r)^8
take the 8th root of both sides of the equation to get:
(40,800/40,000)^(1/8) = 1+r.
subtract 1 from both sides of the equation and solve for r to get:
r = (40,800)/40,00)^(1/8)-1 = .0024783946 per quarter.
multiply this by 4 to get:
r = .00991357826 per year.
round this to 2 decimal places to get:
r = .01 per year.


if you show it as a percent first and then round to 2 decimal places, you will get:
r = .00991357826 per year * 100 = .991357826% per year.
round to 2 decimal places to get:
r = .99% per year.


the answer depends on whether you have to show it as a rate or as a percent before you round it.