Finance math
posted by Tina on .
If $100 is invested at 6% compunded
A  annually
B  quarterly
C  monthly
what is the amount after 4 years? How much interest is earned?

A. Pt = Po*(1+r)^n.
r = 6%/100% = 0.06 = Annual % rate expressed as a decimal.
n = 1 comp./yr * 4 yrs = 4 compounding
periods.
Pt = 100*(1.06)^4=$126.25 After 4 yrs.
Int. = Pt  Po = 126.25  100 = $26.25.
B. Pt = Po*(1+r)^n.
r = (6%/4) / 100% = 0.015 = Quarterly
% rate expressed as a decimal.
n = 4 comp./yr. * 4yrs = 16 compounding
periods. Calculate Pt and Int.
C. Pt = Po*(1+r)^n.
r = (6%/12) / 100% = 0.005 = Monthly %
rate expressed as adecimal.
n = 12 comp./yr * 4yrs = 48compounding
periods. Calculate Pt and Int.