Question

Which explicit formula can be used to find the accounts balance at the beginning of year 3?

Answer 1

The formula for the amount A in an account with principal P and interest rate r compounded annually for t years is

... A(t) = P(1+r)^t

You want to find A when P=400, r=0.05, and t=3. Substituting those values gives you

... A(3) = 400·(1 +0.05)³

The appropriate choice is

... A. A(3) = 400·(1 +0.05)³