Interest Compounded Quarterly

Introduction to interest compounded quarterly:

Interest is a fee paid on borrowed assets. It is the price paid for the use of borrowed money. Compound interest arises when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal is called compounding (for example the interest is compounded). In this article we shall discuss about interest compounded quarterly

Interest Formula for Compounded Quarterly

The basic formula for Compound Interest is:

FV = PV (1+r)n

PV is the current value or present value

r is the annual percentage rate of interest (percentage)

n is the total number of years the amount is deposit

FV = Future Value (amount of money collect after n number of years, with interest.)

Quarterly compounded interest = P (1 + r/n)nt = (Quarterly Compounding)


Interest Compounded Quarterly Example Problem

Ex 1:Rose deposits $7000 in a bank account, bank paying at the rate of 7% per year, compounded and credited quarterly. Find how much will he have at the end of 5 years?

Here p=$7000, n=4, r=7/100, t=5

Quarterly compounded interest = P (1 + r/4)4(5)

=7000(1+0.07/4)20

= 7000.00 is worth  9,903.45

Ex 2:Jessica deposits $6000 in a bank account, bank paying at the rate of 6% per year, compounded and credited quarterly. Find how much will he have at the end of 3 years?

Here p=$6000, n=4, r=6/100, t=3

Quarterly compounded interest = P (1 + r/4)4(3)

=6000(1+0.06/4)12

= 6000.00 is worth  7,173.71

Ex 3:Joseph deposits $5000 in a bank account, bank paying at the rate of 5% per year, compounded and credited quarterly. Find how much will he have at the end of 4 years?

Here p=$5000, n=4, r=5/100, t=4

Quarterly compounded interest = P (1 + r/4)4(4)

=5000(1+0.05/4)16

= 5000.00 is worth  6,099.45

Ex 4:Jim deposits $4000 in a bank account, bank paying at the rate of 5% per year, compounded and credited quarterly. Find how much will he have at the end of 6 years?

Here p=$4000, n=4, r=5/100, t=6

Quarterly compounded interest = P (1 + r/4)4(6)

=4000(1+0.05/4)24

= 4000.00 is worth  5,389.40