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10,000 is deposited in a certain account that pays r percent [#permalink]
13 Oct 2005, 14:47

$10,000 is deposited in a certain account that pays r percent annual interest compounded annually, the amount D(t), in dollars, that the deposit will grow to in t years is given by D(t) = 10,000 {1+(r/100)}t. What amount will the deposit grow to in 3 years?

(1) D(t) = 11,000
(2) r =10

OA is D. But i think it should be B as we dont know the value of t...

d(t) is the same as future value. Using the compound interest formula, and knowing the time, we can calculate either the interest rate or FV as long as we know the principal amount (10,000), total time (3 years), and #`s of compounds (annually=1).

The C.I. formula is:

FV = principal * (1 + (interest rate) / N)(time * N), where n equals # compounds

I still dont agree with the OA. I thought the answer was B.

D(t) = 11,000 (in 1) is what? after first year or after third year. As a matter of fact if you use the r = 10 % given in (2), the D(t) given in (1) is after first year.

$10,000 is deposited in a certain account that pays r percent annual interest compounded annually, the amount D(t), in dollars, that the deposit will grow to in t years is given by D(t) = 10,000 {1+(r/100)}t. What amount will the deposit grow to in 3 years?

(1) D(t) = 11,000 (2) r =10

OA is D. But i think it should be B as we dont know the value of t...

When the question asks "What amount will the deposit grow to in 3 years?", doesnt it mean t = 3 ... ?

In the formula, there are two variables .. t and r. Question gives value of t. All we need it is a rate of interest. And statement 2 gives that out...