need help understanding interest compounding quarterly?

Question

example 20,000.00 with 8% interest for 3 years

Answer 1

8% per year is 8/4=2% per quarter. 3 years =12 quarters so

$20,000*1.02^12=$25364.84

the interest is $5,364.84

Answer 2

so which you're actual asking what fee interior the kind of a million + fee / one hundred while raised to the fourth ability might equivalent a million.05. for sure that's the fourth root of a million.05 that's a million.0122722 for this reason a value of a million.22733% according to quarter provide you 5% effectual. yet you used the wording "compounded quarterly" this skill which you incredibly choose the nominal annual fee compounded quarterly that's in simple terms the genuine quarterly fee incorrectly extrapolated to an annual fee by using multiplying it by using 4 as there are 4 quarters in a year. This leads to a nominal fee of four.90889% according to annum compounded quarterly.

Answer 3

well u would have...

20000(1.08)^12 to get total amount after 3 years if interest was compunded quarterly at 8%. u raise to the power of 12, because over those 3 years there would be a total of 12 quarters. if u get me?

Answer 4

You cut the interest by the number of times per year that you compount.

So, rather than 8% per year, it is 2% per quarter.

So, 20K annually at 8% compounded quarterly is 25,364.82

20K compounded annually is 25,194.24

Answer 5

A=P(1+(r/n))^(nt)

quarterly means 4 times a year.

A=20,000(1+(.08/4)^(4*3)
A= 25364.84

Answer 6

So, each quarter, you'd earn 8%/4 = 2%.

After the first quarter, you'd have 20,000 + 2% of 20,000 = 20,400. The second quarter, you'd have 20,400 + 2% of 20,400 = ???

If you extend that out (work this out for yourself), you'd get: 20,000 * 1.02 ^ 12