A man decides to buy a horse. He pays 60 dollars for the animal. After a year, the value of the horse has increased to 70 dollar
1 answer:
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Answer:
$119.56
Explanation:
We will use compound interest formula to solve this problem.
The formula is:
Where
F is the future value
P is the present amount
r is the rate of interest per period
t is the number of periods
Here,
F is the value we want, after 3 years
P is the present amount, $100
r is the rate of interest per quarter (per period)
Given r = 6% annually, so that would make:
6%/4 = 1.5% per quarter, or 1.5/100 = 0.015
Also, t is the number of quarters in 3 years, that would be 4*3 = 12
Now, substituting, we get our answer:
The first answer choice is right, $119.56