If you can thx in ! chan deposited money into his retirement account that is compounded annually at an interest rate of 7%. chan thought the equivalent quarterly interest rate would be 2%. is chan correct? if he is, explain why. if he is not correct, state what the equivalent quarterly interest rate is and show how you got your answer.

Chan is not correct.

The correct equivalent quarterly interest rate is 1.3108% per quarter.

Step-by-step explanation:

Given that Chan deposited money into his retirement account.

The interest was 7% compounded annually.

Let P be the amount invested and F the final amount got after 1 year

If compounded annually,

F = P(1+0.07) = 1.07P

If compounded quarterly, no of quarters = 4

F =

  = 1.3108P

Hence equivalent interest rate = 1.3108% and not 2%