interest rate that is compunded quarterly . how much would interest rate have to be if you had to wait 5 years for the money in your accyearo $1,200

Question

Use annual compound interest 

Answer 1

compounded quarterly

what interest rate will leave you $1200? after 5 years

general formula is

FV = Po(1+r/n)^nt where Po= initial amount, FV=Future Value=1200, t= years =5

n=number of compounding periods per year,=4 r=interest rate

1200 = Po(1+r/4)^(4)(5)

solve for r

you need to know Po,

1200/Po = (1+r/4)^20

1+r/4 = the 20th root of 1200/Po

r/4 = -1+ (1200/Po)^(1/20)

r = -4 +4(1200/Po)^(.05)

let's say Po =1000, for example, then

r = -4 +4(1.2)^.05= about .036631

annual interest rate = about 4% rounded off to nearest integer percent