If a savings account pays interest at 4 compounded quarterly

If a savings account pays interest at 4% compounded quarterly, then the amount of $1 left on deposit for 5 years would be found in a table using

Select one:

A. 5 periods at 4%.

B. 5 periods at 1%.

C. 20 periods at 4%.

D. 20 periods at 1%.

Solution

Answer is D. 20 periods at 1%

Since interest is 4% compounded quarterly so we will device it by 4 (i.e.number of quarter in a year). Also deposit period is 5 years so it will be multipled by 4 (i.e.number of quarter in a year)