The local credit union offers an interest rate of 6%, compounded quarterly. How long (number of quarters) will it take Lisa to earn $200 worth of interest on her initial deposit of $500?
In this Question following is given
Interest rate per annum 6% compounded quarterly
Principle amount (Initial Deposit)- $500
Interest to be earned - $200
Time( in quarters ) - we have to calculate
Formula for interest compounded quarterly is A = P(1 + r/n)nt
Where A = interest earned + Principle
r = rate of interest
n= number of compounding period per year
t = time involved in year'
So in the present case
we will do as follows -
200= 500(1+ 0.06/4)4t
t= 5.65 year approx
In quarters= 5.65*4= 22.6 qaurters approx
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