Compound Interest Finding the Year or Percent

A bank advertises it's "Money Market Checking" as having 2% annual interest that is compounded quarterly. The equation for an example account would look like this: A=4000\left(1+\frac{.02}{4}\right)^{4t} Why does the equation divide our 2% (.02) by 4?

What is important about how time is calculated in I= Prt ?

• it must be in months

• it must be in years

• it is not calculated

Find the compound interest:
Principal: $1735
Interest Rate: 0.8%
Time: 1 year

• $1,388

• $138.80

• $13.88

• None of the answers are correct.

Aiydan puts $5000 into a savings account with a 3% interest rate. The interest compounds yearly. How much money will he have in his account after 8 years?

• $150

• $5300

• $6333.85

• $40786.54

Sara takes out a $30000 loan for her new Honda Civic. She will pay back the entire loan at the end of 8 years. It is a compound interest loan with an interest rate of 7.25%. How much will she have to pay at the end of 8 years?

• $17400.00

• $30725.00

• $52516.97

• $2351982.31

Which equation is used for finding compound interest paid more than once a year?

Suppose you have $12,000 to invest. Which investment yields the greater return over 3 years: 7% compounded monthly or 6.85% compounded continuously?

• 7% compounded monthly

• 6.85% compounded continuously

Suppose you have $6,000 to invest. Which investment yields the greater return over 4 years: 8.25% compounded quarterly or 8.3% compounded semiannually?

• 8.25% compounded quarterly

• 8.3% compounded semiannually