Question

Mr. Mady opens a savings account with principal P dollars that pays 4.11% interest compounded quarterly. Express his ending balance after one year algebraically.

Answer 1

Answer

Find out the  ending balance after one year algebraically.

To proof

Formula of compound interest quarterly

$Compound\ interest_{quarterly} = P( 1+\frac{\frac{R}{4}}{100} )^{4n}$

where

P = principle

R = rate of interest

n = time period in the years

As given

Mr. Mady opens a savings account with principal P dollars that pays 4.11%

interest compounded quarterly

Time = 1 year

put in the equation

we get

$Compound\ interest\ quarterly = P (1 +\frac{0.0411}{4})^{4}$

solving the above

$= P ( 1 + 0.010275)^{4}\\= P(1.010275)^{4}$

Solving

= 1.0417P ( approx )

ending balance after one year is $1.0417P ( approx )

Hence proved