6% compounded quarterly

Question

please help me with this finite math homework 

Answer 1

From your question, there is no principal given so represent it with P.  There is also no time, so use t.  Since you are compounding 6% quarterly (that 6% is for the year), you are earning 6%/4 = 1.5% per quarter.  Since there are 4 quarters in a year, the number of quarters is 4t.

The equation would look something like this:

Future Amount = P*(1.015)^4t

The 1.015 came from the 1+periodic rate - the periodic rate is 1.5% per quarter which is the same as 0.015.  These interest rates add very easily to 1.

By the way (1.015)⁴=1.0613635506 which is an addition 6.136% earned per year over the principal (represented by the 1).  This is called the effective annual rate and will always be greater than the rate you are compounding.

Hope this helps and its not too late!!