A bank account with $100 earns 8% ...

[SuzanR808]

A bank account with $100 earns 8% annual interest, compounded quarterly. If there are no deposits or withdrawals, how much money will be in the account after 6 months?

[note: there are no multiple choice options; this was part of the strategy explanation for interest formulas]

In setting up the equation, I got -> $100*[(1.02)^2] = $104.04. This matches the explanation, however the text continues to say that at the end of the first year, the account will have $100 plus 2% of $100. Would it not instead be -> $100*[(1.02)^4] = $108.24 , as it is interest compounded quarterly (4 times per year)?

Note: referencing end of Chapter 5 of the FDP Strategy #1 book (pg. 68).

[RonPurewal]

6 months is just two quarters, not four. your calculation would be accurate if interest were allowed to accumulate for an entire year.

[RonPurewal]

by the way -- this is the wrong folder for this question. please be sure to post questions in the correct folder from now on (including any further questions about this one, if you have any). thanks.