Question

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. i need to show my work and everything

Answer 1

The reason he is NOT correct is because a quarterly rate refers to 1/4 of a year. 7/4 does mot equal 2. it only equals 1.75, so his quarterly interest would be 1.75%.