45 Points!!!!!!!!!!!!!!Alexander deposited money into his retirement account that is compounded annually at an interest rate of 7%. Alexander thought the equivalent quarterly interest rate would be 2%. Is Alexander correct? If he is, explain why. If he is not correct, state what the equivalent quarterly interest rate is and show how you got your answer.
Accepted Solution
A:
The equation for compound interest is:
[tex]A = P(1+ \frac{r}{n})^{ nt} [/tex]
Where r is the interest rate and n is the number of times per year it's applied. Β Annually n = 1 and 7% interest r = 0.07 The quarterly rate 2% is already quartered 0.02 = r/n .