# The annual interest rate of Erika's savings account is 6.4%, and simple interest is calculated quarterly. What is the periodic interest rate of Erika's account?

##### 1 Answer

Jan 27, 2018

#### Explanation:

The annual interest rate is given at 6.4%. Knowing that

#I=Pxxixxn# , isolate the unknown variable; that is,#i#

#i=(I)/(Pxxn)# where:

#I="Interest"#

#P="Principal"#

#i="interest rate"#

#n="number of years"#

Multiplying the equation by

#i=(I)/(Pxxn)}1/4# ;

#color(red)(i/4)=(I)/(Pxx4n# where:

#color(red)(=i/4=0.064/4=0.016=1.6% "per qtr")=" the quarterly interest rate that is equally distributed for a year "#

#i=(cancel(4)xxI)/(Pxxcancel(4)n)#

#i=(I)/(Pxxn)# , the original formula