text: # math
  
  posted by on .
  
  Please help I know to figure out simple interest but what is the best way to figure out compound interest example 8,000 invested for one year at 6 % compounded quarterly (with the answer rounded to the nearest dollar
  
  • math - ,
  
  For starters, if the 6% is compounded quarterly, that is 6/4 or 1.5 % each three month period. (Percent interest is generally given as if for a year)
  
  That means that every three months you multiply what you have in the bank by 1.015.
  
  In a year, you compound four times, so you multiply by 1.015 four times or
  
  \$8,000 * 1.015*1.015*1.015*1.015
  or of course
  \$8,000*1.015^4
  or
  \$8,000 * 1.06136 (a little better than 6% simple)
  or
  \$8490.91 which is to the nearest dollar \$8491