Question

1. (07.01 MC)

Answer 1

Answer:

"Compounded monthly" is the correct approach.

Step-by-step explanation:

Harrison,

Given that:

Principle,

P = $200

Interest rate,

R = 2%

Compounded quarterly,

R = $\frac{1}{4}\times 2$

  = $\frac{2}{4}$

After 2 years, the amount (A) will be:

= $P(1+\frac{R}{100} )^n$

By putting the values, we get

= $200\times (1+\frac{2}{400} )^{4\times 2}$

= $200\times (1+\frac{2}{400} )^8$

= $208.14$ ($)

Sherrie,

Given that,

Principle (deposited),

P = $200

Interest rate,

R = 4%

After 2 years, the amount (A) will be:

= $P(1+\frac{R}{100\times 12} )^{12\times 2}$

= $200\times (1+\frac{4}{1200} )^{24}$

= $216.628$ ($)