Posted by Jim on .
A $20,000 deposit was placed in a bank paying 5.75% interest compounded quarterly. After 12 months, how much interest was earned.
P = Po(1+r)^n.
Po = $20,000
r = (5.75%)/4) / 100% = 0.014375 =
Quarterly % rate expressed as a decimal.
n = 4Comp/yr * 1Yr=4Compounding periods.
Plug the above values into the given Eq
and solve for P. P = $21,175.04.
Int. = P-Po.