My Math Forum Eric and his children

 Elementary Math Fractions, Percentages, Word Problems, Equations, Inequations, Factorization, Expansion

 March 10th, 2014, 11:35 PM #1 Senior Member     Joined: Oct 2013 From: Far far away Posts: 429 Thanks: 18 Eric and his children Eric deposited $32,000 in a savings account to save for his children's college education. The bank pays 8% tax deferred interest per year compounded quarterly. How much will his account be worth at the end of 18 years? My attempt: Here I used the formula: $A=P(1+r)^{n}$ where A = amount, P = principal, r = interest rate and n = number of interest periods So: $A=32000(1+0.08/4)^{18\times 4}=133,156.49$. At the end of 18 years Eric's deposit becomes$133,156.49 Am I correct? I am confused about the interest rate. It says 8% per year compounded quarterly. Does this mean the interest is 8%/4 per quarter? Thanks
March 11th, 2014, 09:14 AM   #2
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Re: Eric and his children

Quote:
 Originally Posted by shunya Am I correct? I am confused about the interest rate. It says 8% per year compounded quarterly. Does this mean the interest is 8%/4 per quarter?
Yes and yes. Good job!

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### eric deposited \$32,000 in a savings account

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