# One Question on interest.

• Feb 23rd 2009, 05:40 PM
WallStreet
One Question on interest.
Mary invests $10,000 at 4.5% interest a year, compounded quarterly. (A)How much will she have after 20 years? (B) If the interest were compound semi-monthly, how much more would Mary have after 20 years than compounded quarterly? Equation A=P[1+r/k]^kt I got 24,472 after 20 years But I dont know how to do the second part (B) • Feb 23rd 2009, 05:55 PM skeeter Quote: Originally Posted by WallStreet Mary invests$10,000 at 4.5% interest a year, compounded quarterly.

(A)How much will she have after 20 years?

(B) If the interest were compound semi-monthly, how much more would Mary have after 20 years than compounded quarterly?

Equation

A=P[1+r/k]^kt

I got 24,472 after 20 years

But I dont know how to do the second part (B)

24 semi-monthly periods in a year ...

$10000\left(1 + \frac{.045}{24}\right)^{20(24)}$
• Feb 23rd 2009, 06:01 PM
WallStreet
thanks. Did i do part A correctly?
• Feb 23rd 2009, 06:44 PM
skeeter
close enough ... I got 24472.75