Try the fastest way to create flashcards
Question

Molly O'hara's gross pay in the second week of January was $1,120.

Suroyo Wahyudi deposited$3,500 in a mone y market acco unt that pays interest compounded quarterly. For the first 3 months, the account paid 4.3 % annual interest. For the next 3 months, an annual interest rate of 4 % was paid. What total interest did Suroyo earn for the six months?

Solution

Verified
Answered 1 year ago
Answered 1 year ago
Step 1
1 of 7

In this item, we are given a scenario wherein Suroyo Wahyudi deposited the principal amount $3500\$3500. With an interested compounded quarterly, for the first three months, he paid a 4.3%4.3\% annual interest. For the following month, Suroyo would only have to pay 4%4\% interest, compounded quarterly.

Observe in this problem that we are dealing with compound interest. However, note that the interest would be compounded quarterly (every four months) but the interest rate changed in only three months. This simplifies our calculation.

However, before we proceed, let us first recall important concepts regarding this problem.

What is interest, and how do we compute for it?

Create a free account to view solutions

Create a free account to view solutions

Recommended textbook solutions

Mathematics for Business and Personal Finance 1st Edition by Lange, Rousos

Mathematics for Business and Personal Finance

1st EditionISBN: 9780078805059 (1 more)Lange, Rousos
4,857 solutions
Business Math 17th Edition by Mary Hansen

Business Math

17th EditionISBN: 9780538448734 (1 more)Mary Hansen
3,762 solutions
Financial Algebra 1st Edition by Richard Sgroi, Robert Gerver

Financial Algebra

1st EditionISBN: 9780538449670 (1 more)Richard Sgroi, Robert Gerver
2,606 solutions
Financial Algebra: Advanced Algebra with Financial Applications 2nd Edition by Richard Sgroi, Robert Gerver

Financial Algebra: Advanced Algebra with Financial Applications

2nd EditionISBN: 9781337271790Richard Sgroi, Robert Gerver
3,016 solutions

More related questions

1/4

1/7