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23 Mar 2020, 06:04
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
61% (02:12) correct
39%
(02:06)
wrong
based on 337
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Not Attempted Yet
Binh invested $1,000 in a certificate of deposit (CD) that matured in 4 years. The certificate paid 4 percent annual interest compounded quarterly for the original 4-year term and then 2 percent simple annual interest on the compounded amount after that until the CD was redeemed by the holder. If Binh held his CD for exactly 6 years, how much money did he receive when he redeemed it?
A. \(1,000 × (1.01)^{16} × 1.04\)
B. \(1,000 × (1.01)^{16} × (1.02)^2\)
C. \(1,000 × (1.04)^6\)
D. \(1,000 × (1.01)^{24}\)
E. \(1,000 × (1.04)^{16} × (1.02)^2\)
A. \(1,000 × (1.01)^{16} × 1.04\)
B. \(1,000 × (1.01)^{16} × (1.02)^2\)
C. \(1,000 × (1.04)^6\)
D. \(1,000 × (1.01)^{24}\)
E. \(1,000 × (1.04)^{16} × (1.02)^2\)
25 Mar 2020, 12:39
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Balance after 4 years with compound interest of 4% compounded quarterly
Balance = P X (1+i/c)^tc
= 1000 x(1 + .04/4)^4x4
= 1000 x(1.01)^16
Simple interest for 2 year with principal amount at the end of 4 years
= 1000 x (1.01)^16 (1+.02 x 2)
=1000 x (1.01)^16 x (1.04)
Ans - A
Balance = P X (1+i/c)^tc
= 1000 x(1 + .04/4)^4x4
= 1000 x(1.01)^16
Simple interest for 2 year with principal amount at the end of 4 years
= 1000 x (1.01)^16 (1+.02 x 2)
=1000 x (1.01)^16 x (1.04)
Ans - A
27 Mar 2020, 07:06
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Bunuel
The amount of his investment at the end of the first 4 years is:
1,000 x (1 + 0.04/4)^(4 x 4) = 1,000 x (1.01)^16
If we let A = 1,000(1.01)^16, the amount of his investment at the end of the 6 years is:
A + A x 0.02 x 2 = A x (1 + 0.04) = A x 1.04
Therefore, the amount at the end of the 6 years is 1,000 x (1.01)^16 x 1.04.
Answer: A
