Question

Find the amount at the end of two years and seven months if P1000 is invested at 8% compounded quarterly using simple interest for anytime less than a year interest period.

Answer 1

Compound Interest:

P: the principal, amount invested =1000

A: the new balance (we need to calculate A)

t: the time = 2 years

r: the rate, (in decimal form) 8 %

n: the number of times it is compounded per year. 4 times

Principle	1000
Annual Interest Rate	8%
Compound Period Per Year	4
Years (converting 2 years 7 months to years)	2.583
Amount Earned as per formula given above	1171.659
Formula Used = 1000*(1+0.08/4)^(4*2.583)=1227.035

You can calcute the above value in excel also using the formula provided above.

Let me know if you have any further queries.

The above excel calculation will solve you queries.

If you divided 7/12 you will get 0.5833 (year conversion of 7 months.)