Hi! Have a doubt in this QQ on compound interest:
QQ: Should we not have divided the 4% by 3 - because the amount compounds 3 times a year?
No, because the interest is 4\% per 4 months and not 4\% per year.
Ahh! Understood, so we’re directly given the “compounded every 4 month” figure (assuming the p.a. rate was 12% then here)- and we only thus are factoring in the number of compounding periods as 3 in a year.
Got it, thank you so much!