MuffE wrote:

Pg 12 #21

John deposited $10,000 to open a new savings account that earned 4% annual interest, compounded quarterly. If there were no other transactions in the account, what was the amount of money in John's account 6 months after the account was opened?

A) $10,100

B)$10,101

C)10,200

D)10,201

E)$10,400

From this I got $10K*.04*6/12= $200 which means the account should have $10,200...but the answer keys says $10,201.

Is this an error or did I miss something?

This is not an error in the answer. According to the question, interest is compounded quarterly.

So annual interest = 10000*0.04 = 400

Interest acrued in a quarter = 400/4 = 100.

so the amount acrued after 6 months = (10000 + 10000*0.04/4) + (10100 + 10100*0.04/4) = 10201