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4 August, 04:33

Brenda savings account principal 850, 5.5% annual interest rate and is compounded quarterly for 1 year. what is the compound interest?

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  1. 4 August, 06:47
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    A = $ 861.69

    Equation:

    A = P (1 + rt)

    Calculation:

    First, converting R percent to r a decimal

    r = R/100 = 5.5%/100 = 0.055 per year,

    putting time into years for simplicity,

    1 quarters : 4 quarters/year = 0.25 years,

    then, solving our equation

    A = 850 (1 + (0.055 * 0.25)) = 861.6875

    A = $ 861.69

    The total amount accrued, principal plus interest,

    from simple interest on a principal of $ 850.00

    at a rate of 5.5% per year

    for 0.25 years (1 quarters) is $ 861.69.
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