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Sagot :
The equivalent amount she had to start with 7 years ago is $269.90.
The function to find the effective rate per year is 1.02^4 - 1.
What is the equivalent amount?
The formula that can be used to determine the equivalent amount is:
present sum / annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
Where:
- r = interest rate = 8%/4 = 2%
- n = number of years = 7 x 4 = 28
{1.02^28} - 1 / 0.02 = 37.05121
$10,000 / 37.05121 = $269.90
What is the effective rate per year?
Effective annual rate = (1 + APR / m ) ^m - 1
M = number of compounding
1.02^4 - 1
To learn more about the effective annual rate, please check: https://brainly.com/question/4064975
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