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It would earn more if interest were compounded quarterly but any lender will adjust the quarterly rate so that you get the same!
For example, a 5% annual rate is equivalent to a rate of 4.9089% per quarter. This is one reason that some countries require the publication of Annual Equivalent Rates to enable investors to compare such differences.
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If Mary deposits 275 in principal at an interest rate of 3.2 percent how much interest will she earn in one year?
Before she chooses a bank and deposits her money, Mary should shop around first.There are different kinds of interest.At 3.2% . . .If it's simple interest, her money will earn $ 8.80 .If it's compounded quarterly, it earns $ 8.91 in one year.If it's compounded monthly, it earns $ 8.93 .If it's compounded daily, it earns $ 8.94 .Also, by the way, notice that Mary doesn't earn the interest. Her invested money does.
Nate wants to buy a CD for 1000 that earns 3 APR and is compounded quarterly for 5 years. He will be taxed on 20 of the interest that he earns. What is the total amount of interest Nate will earn afte?
He will get 128.95 interest after tax.
How much interest will 2000 earn at 5 percent over four years compounded yearly?
It earns 431.0125 . After 4 years, it has grown to 2,431.01 .
How much interest does 10000 dollars earn in 4 years in a certicate of deposit paying 9.5 percent interest compounded quarterly?
Using the compound interest formula which states A = P (1 + r/n)nt. We get the following result:10000 ( 1 + .095/4)4(4)10000 (1 + 0.02375) 1610000 (1.02375) 1610000 (1.45580)$14558Therefore you earn approximately $4558.00 on a CD yielding a 9.5% interest rate for 4 years.
Franklin has 2500 in a savings account that pays interest at the rate of 4 percent annually. How much interest will he earn after one year?
4% of 2500 = 2500*4/100 = 100 Assuming there is no compounding - The above calculation is appropriate and 100 is the interest earned by Franklin at the end of one year. There are banks that offer quarterly or half yearly compounding wherein, the interest earned in the first quarter would be considered as principal in the second quarter. In that case, the calculation would vary. In the UK the quoted rate must be the annual equivalent rate which takes any compounding into account. So 4 percent annually (as stated in the question), could be 1.98% every six months, or 0.3274% every month. But at the end of one year the compounded interest must be 4%. Other countries will have different regulations.
