Question

redo question 18 above with the same amount of deposit and the same interest rate, but with the interest compounded quarterly. how much money would you have at the end of the four years in this situation?

Answer 1

There are no given figures. I'll just show what the difference is. Let us assume the following
Principal = 10,000
interest rate = 12%
term = 4 years

Simple Interest = Principal * interest rate * term
S.I = 10,000 * 12% * 4 years
S.I = 4,800

Total value at the end of 4 yrs = 10,000 + 4,800 = 14,800

Compounded Interest. Compounded quarterly.
A = P(1 + r/n)^n*t
A = 10,000 (1 + 12%/4)^4*4
A = 10,000 (1.03)^16
A = 10,000 (1.60)
A = 16,000 value after 4 years.