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PS- certificate [#permalink] New post 06 Jul 2008, 20:48
. A 2-year certificate of deposit is purchased for k dollars. If the certificate earns interest at an annual rate of 6 percent compounded quarterly, which of the following represents the value, in dollars, of the certificate at the end of the 2 years ?
(A) (1.06)2k
(B) (1.06)8k
(C) (1.015)2k
(D) (1.015)8k
(E) (1.03)4k
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Joined: 23 May 2006
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Re: PS- certificate [#permalink] New post 06 Jul 2008, 20:59
CI formula

Sum = P(1+r/100n)^nt

Principle = k, rate = 6, n = 4, t = 2

Sum = k(1+6/400) ^8
= k(101.5/100)^8
= k(1.015)^8

Hence D
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Re: PS- certificate [#permalink] New post 07 Jul 2008, 05:35
OA is D
Re: PS- certificate   [#permalink] 07 Jul 2008, 05:35
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