Hiro has $2,270 in a savings account which earns 5.5% interest, compounded quarterly. Find the amount in his account after the second quarter.
In one year, or four quarters, the account will earn:
$2,270 x 0.055 = $124.85 in interest.
To find the amount after the first quarter, we need to add one-fourth of the annual interest to the principal:
$2,270 + ($124.85/4) = $2,298.71
Now we will repeat the process to find the amount after the second quarter. We will use $2,298.71 as our new principal, and find the interest earned in the second quarter:
$2,298.71 x 0.055 = $126.43 in interest earned in one year.
But we only want to find the interest earned in one quarter, so we divide by four:
$126.43/4 = $31.61 in interest earned in the second quarter.
To find the total amount in the account after the second quarter, we add the interest to the principal:
$2,298.71 + $31.61 = $2,330.32
Therefore, Hiro will have $2,330.32 in his account after the second quarter.