I saw Greg’s solution to a CI question in one of the quiz and couldn’t understand his solution for quantity A.
If x is compounding every 4 months for 3 years, shouldn’t it result in x(1.013)^9 insead of x(1.04)^9?
Nah, that would be the case if the question said “ 4\% every year compounded every 4 months” or something like that.
In this case, there’s 9 blocks of 4 months and each one increments some quantity by 4\%. Even without the formula, you should be able to now reason why it’s (1.04)^{9} x.
That is not to say the formula doesn’t work. If you want to make the formula work, then just change the rate to 12\% because the formula requires the yearly interest rate.
It should look something like this:
A = P ( 1 + \frac{0.12}{3})^{3 \cdot 3} = P(1 + 0.04)^{9}