You deposited R1,000 in a savings account that pays 8 percent interest, compounded quarterly, planning to use it to finish your last year in college.Eighteen months later, you decide to go to the Durban to become a scuba diving instructor rather than continue in school, so you close out your account.How much money will you receive?

Question

Quizplus · Accepted Answer

The interest is compounded quarterly, so the interest rate per period is 2% (8% annual rate divided by 4 quarters). Over 18 months, there are 6 quarters. Using the formula for compound interest: A = P(1 + r/n)^(nt), where P = R1,000, r = 0.08, n = 4, and t = 1.5 years, the amount is approximately R1,126.

You Deposited R1,000 in a Savings Account That Pays 8