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When Lauren was born on January 1, 1990, her grandparents put $1000 in a savings account in her name. The account earned 7.5\% annual interest compounded quarterly on March 1, June 1, September 1 and December 1. To the nearest dollar, how much money was in her account when she turns two?

 

 

Thanks!

 #1
avatar+98196 
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There will be 8 compounding periods....since the compounding is quarterly, the effective interest rate  is (.075/4)....so we have

 

 

A  =  P ( 1 + i/4)^(n * t)     

 

Where  P = 1000, i  = .075, n = 4 and t  = 2      ......so.....

 

A  = 1000 ( 1 + .075/4)^8  =  $1160

 

 

cool cool cool

 Dec 1, 2017
edited by CPhill  Dec 1, 2017
 #2
avatar+1442 
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