Principal x rate x time = interest
Interest + principal = balance
Principal is your starting amount (25000)
Rate is the percent of interest (.09)
Time is how often which in this case is quarterly (1/4 or .25)
25000 compounded quarterly at 9%; what is the formula for this?
Compounded quarterly means you divide it by 4, so we have,
9% means=9 / 100=.09 /4=.00225 per 1 quater of the year.
.00225 + 1=1.00225, so the formula is (1 + interest rate per period)^n, n being number of periods,
So for 1 year we have 4 quaters and the formula becomes this:
(1 + .00225)^4 X25,000=27,327.08. That's how much you will have at the end of year at 9% compounded quarterly.
