Question

Use the compound interest formula, A = P(1 + r/n)^nt, to find the following amount of money after the given amount of time:

Answer 1

First question: you're given $r=0.027$, $n=1$, $t=3$, and $P=3500$. So the value of the account after 3 years is

$3500\left(1+\dfrac{0.027}1\right)^{1\cdot3}\approx3791.22$

making the answer B.

Second question: $r=0.12$ and $n=12$. APY is given by

$\mathrm{APY}=\left(1+\dfrac rn\right)^n-1$

so the APY in this case is

$\left(1+\dfrac{0.12}{12}\right)^{12}-1\approx0.1268=12.68\%$

making the answer D.