Mark deposited $1,200 in a new bank savings account at the beginning of the quarter. The principal earns 5% interest compounded quarterly. He made no other transactions during the period. How much should be in his account at the end of 6 months? Show your work. Remember: (3/12) = 0.25

Question

ranga · Answer

5% interest compounded quarterly.
The interest rate per quarter is 5/4% = 1.25% = 0.0125
Account balance at the end of 6 months = ?
6 months is two quarters.
So we need to compound the interest twice.
After the end of one quarter the amount will be: 1200 * (1 + 0.0125) = $1215
At the end of two quarters, the amount will be: 1215 * (1.0125) = $1230.19

anonymous · Answer

Thank you so much, this make so much more sense now :)

ranga · Answer

Alright! You are welcome.

anonymous · Answer

wow, ranga, i think you are really smart. youre a smart

ranga · Answer

You are too kind halai. :)