Posted by matt on .
Compute the compound quarterly amount after 1 year for $100 invested at 12% interest compounded quarterly. What simple interest rate will yield the same amount in 2 years?

math 
Henry,
P = Po(1+r)^n.
r = (12%/4) / 100% = 0.03 = Quarterly %
rate expressed as a decimal.
n = 4comp./yr * 1yr = 4 Compounding periods.
a. P = 100(1.03)^4 = $112.55.
b. P = Po + Po*r*t.
r = APR expressed as a decimal.
t = 2 Years.
100 + 100*r*2 = 112.55.
100*r*2 = 112.55  100 = 12.55.
r = 12.55 / 200 = 0.06275 = 6.275%.