6th Grade Math Textbook, Fundamentals

Dylan deposits $4000 in his savings account. The annual interest rate is 12%,

compounded quarterly. How much interest will he earn in 2 years?

What is the balance in his account after 2 years?

Hint:Quarterly refers to 4 interest periods per year.

• Find the number of interest periods and the rate of interest.
  The annual interest rate is 12%, compounded quarterly.
  12%  4 3%


• Find the factor.
  Dylan will earn interest for 2 years, or 8 periods.
  Look across the 8th period row and down the 3% column to find the factor.


• Multiply the deposit by the factor to find the balance.
  1.2668 • $4000 $5067.20


• Subtract the principal from the balance to find how much interest he earns.
  $5067.20 $4000 $1067.20

Dylan will earn $1067.20 interest, leading to a balance of $5067.20 after 2 years.

Divide the annual interest rate by 4 to find

the interest rate per period.

Lesson 7-14 for exercise sets. &KDSWHU 

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Use the compound interest table to find each balance.

1.$7000 at an annual rate of 8%, 2.$10,000 at an annual rate of 7%,

compounded quarterly, for 1 year compounded semi-annually, for 2 years

3.Discuss and Write How is earning an annual rate of 6% simple interest

for 1 year on $2000 different from earning an annual interest rate of 6%,

compounded quarterly for 1 year, on $2000? Explain.

Mel deposits $5000 in an account. The annual interest rate is 8%,

compounded semi-annually. How much interest will he earn in 1 year?

What is the balance in his account after 1 year?

Hint:Semi-annual refers to 2 interest periods per year.

• Find the number of interest periods and the rate of interest.
  The annual interest rate is 8%, compounded semi-annually.
  8%  2 4%


• Find the factor.
  Look across the 2nd period row and down the 4% column to find the factor.


• Multiply the deposit by the factor to find the balance.
  1.0816 • $5000 $5408


• Subtract the principal from the balance to find the amount of interest.
  $5408 $5000 $408

Mel will earn $408 interest, leading to a balance of $5408 after 1 year.

Divide the annual interest rate by 2 to find

the interest rate per period.

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