2026 RSS P1 Q20

2026 RSS P1 Q20

Secondary 4
4 marks

Mr Tan invests $12 000 at a rate of 8% per annum, interest compounded quarterly.

  1. Explain why the interest earned after 1 year is not equal to 8% of $12 000.[1]
  2. Calculate the amount of interest Mr Tan will receive from the investment at the end of 4 years.[3]

Solution:

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Answer:(a) Quarterly compounding earns interest on earlier interest. (b) $4473.43

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