Posted by AR on Tuesday, January 5, 2010 at 12:18pm.
1250 * 0.06 = $75 yearly interest
75 / 4 = $18.75 first quarter interest
1250 + 18.75 = $1,268.75 balance at the end of the first quarter
Repeat the above steps to find the balance after the second quarter.
Actually the first steps are right except with compound interest you earn interest on interest, so just adding another 18.75 would not solve it. You have to account for the interest you earn the 1st quarter. So I got 1287.78
Amount = 1250(1 + .015)^2
= 1287.78
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