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Determine how much is in each account on the basis of the indicated compounding after the specified years have passed; P is the initial principal, and r is the annual rate given as a percent. After one year where P = $4700 and r = 2.5%

Find the compound quarterly, monthly, weekly, and daily.

I found the compound annually ($4817.5) but I'm not sure what the formula would be for them. If you can explain, that would be great!

David K
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Kevin Diez
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1 Answers1

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For shorter compounding periods, you compute each period with the applicable interest. For monthly compounding you get $\frac {2.5\%}{12}$ interest each month, so at the end you would have $4700(1+\frac {2.5\%}{12})^{12}$. Compounding means you earn interest each period on the total in the account including interest earned previously.

Ross Millikan
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