Question

Please help me with this problem.3.Gavin deposited money into his savings account with an annual interest rate of 9%. Gavin thought the equivalent quarterly interest rate would be 2.25%. Is Gavin 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.Answer:

Answer 1

Solution

Annual interest rate = 9%

Note that the annual interest rate is the interest for the whole year.

Now, let us fnd the equivalent quarterly interest rate

For quarterly interest rate, we have

$\frac{1}{4}\times9=\frac{9}{4}=2.25$

Quarterly interest rate is 2.25%

Therefore, Gavin is correct