How much is 500 worth after 40 Quarterlys using an annual interest rate of 4% compounded Quarterly?

<-- Start Balance
<-- # of periods
<-- Interest rate
              

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How much is 500 worth after
40 quarters
using an annual interest rate of 4%
compounded quarterly?

Calculate effective interest rate

There are 4 quarters in a year
Convert interest rate to quarterly

Quarterly Interest  =	Annual Interest Rate
	Compounding Periods

Quarterly Interest  =	0.04
	4

Quarterly Interest = 0.01

Calculate Accumulated Balance

A = B(1 + i)ⁿ
where A = accumulated balance
B = opening balance
i = Quarterly interest rate
and n = number of periods

Plugging in our values

A = 500(1 + 0.01)⁴⁰
A = 500(1.01)⁴⁰
A = 500(1.4888637335882)
A = 744.43

How much interest was earned?

Interest Earned = Accum. Value - Start Balance

Plug in our values

Interest Earned = 744.43 - 500.00
Interest Earned = 244.43

See Answer

A = 744.43
Interest Earned = 244.43

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Compound Interest Accumulated Balance Calculator Video

Tags:

• compound interest accumulated balance
• compound interest
• interest rate
• principal
• yield

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