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3 July, 04:11

A loan requires that the 8% interest be compounded quarterly for 4 years. Find the number of compounding periods

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  1. 3 July, 07:16
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    16

    Explanation:

    Compounding periods are the number of times interest is paid to an investment per year. For example, annual compounding means that interest will be paid once a year hence compounding period would be 1.

    If semiannualIy, interest would be paid twice a year hence 2 compounding periods per year. In this case, quarterly compounding means that interest payment occur every 3 months hence 4 quarters a year.

    In 4 years, total compounding periods would be; 4 * 4 = 16 periods.
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