## Related questions with answers

**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

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

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