Question

1. A savings account earns 8 % Interest each year, compounded quarterly (4 times a year). If a person Invests $100 and makes no further deposits or withdrawals, what is the balance inthe account after 3 years?hpA

Answer 1

So, the formula that we're going to use is:

Compound interest

A = P(1 + r/n)ⁿˣ

Where

A = amount

P = principal = $100

r = rate = 8% = 8 / 100 = 0.08

x = time

In this case, n=4 since it is being compounded quarterly, so:

The answer is $126.82.