Question

Please help IF you can Thx In advance!!!!!

Answer 1

Answer:

Chan is not correct.

The correct equivalent quarterly interest rate is 1.3108% per quarter.

Step-by-step explanation:

Given that Chan deposited money into his retirement account.

The interest was 7% compounded annually.

Let P be the amount invested and F the final amount got after 1 year

If compounded annually,

F = P(1+0.07) = 1.07P

If compounded quarterly, no of quarters = 4

F = $P(1+\frac{7}{100} )^4$

  = 1.3108P

Hence equivalent interest rate = 1.3108% and not 2%