Question

A loan requires that the 8% interest be compounded quarterly for 4 years. Find the number of compounding periods

Answer 1

16 compounded periods

Step-by-step explanation:

Here ,the loan amount was not given , they asked to compute only the compounding period of the loan.,

The period of loan is 4 years

interest calculation mode is quarterly

= (12 months÷4 = 4 times in a year)
`(12 months÷4 = 4 times in a year)`

= 4 ×4 = 16 compounding periods
`4 ×4 = 16 compounding periods`

Hence the 8% interest bearing 4 years loan will compounded 16 times