The expression 1,000(1.0215)4t represents the amount of money in an account after t years. The interest is compounded [annually/semiannually/quarterly/mo nthly], and the effective annual interest rate on the account is [2.15%/4.00%/8.60%/8.88%].

What are the two correct answers that complete the sentences? Choose from the brackets above.

The interest is compounded quarterly.

The effective annual interest rate on the account is 8.60%.

Step-by-step explanation:

Compound interest:

The compound interest formula is given by:

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit year and t is the time in years for which the money is invested or borrowed.

We are given:

Comparing to the general formula.

From the last one:

Which means 4 compoundings per year. This means that the interest is compounded quarterly.

Interest rate:

Since n = 4.

So the interest rate is of 8.60%.

89

step-by-step explanation: