The effective annual interest rate is: i = (1 + 0.064/12)^12 - 1 = 0.066 In year 1: the interest is $613.80 (multiple $9300 by 0.066) In year 2: the interest is $654.31 (add interest from year 1 to $9300 and multiply by 0.066) In year 3: the interest is $656.98 (do the same as year 2) In year 4: the interest is $657.16
The total interest is: $2582.25 The present worth of this amount is: P = 2582.23 / (1 + 0.066)^4 = $1999.72
