Math

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A $20,000 deposit was placed in a bank paying 5.75% interest compounded quarterly. After 12 months, how much interest was earned.

  • Math -

    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.

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