# Use simple and compound interest to find the ending balance of \$16,300 at 3% compounded quarterly for 2 years.

The ending balance of \$16,300 at 3% compounded quarterly for 2 years for simple interest is equal to \$17,278, and for compound interest it is equal to \$17,304.06. A principal amount P, at the rate of interest r per annum, after a time period t years increases to `P_f = P+P*t*r`

Compound interest refers to the situation where interest in any period is earned on both the principal and the interest earned in all the earlier periods. A principal amount P, at the rate of interest r per annum, after a time period t years increases to `P_f = P*(1+r)^t`

In the problem, the principal P = \$16,300. The rate of interest is 3%, compounded quarterly.

The simple interest earned on this in 2 years is equal to 16,300*0.03*2 = 978. The ending balance is equal to 16,300 + 978 = \$17,278.

As in the case of compound interest, compounding is done quarterly, the effective interest rate per period is 0.03/4, and the time period is 2*4 = 8.

The ending balance after 2 years would be 16,300*(1+0.03/4)^8 = 17,304.06.

For simple interest, the ending balance of \$16,300 at 3% compounded quarterly for 2 years is equal to \$17,278, and for compound interest it is equal to \$17,304.06.

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