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06 Apr 2022, 02:15
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D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
70% (02:13) correct
30%
(02:02)
wrong
based on 137
sessions
History
Date
Time
Result
Not Attempted Yet
Leonard invested $10,000 in a 4-year certificate of deposit (CD) with a guaranteed return of 6% every year. What was the value of the certificate of deposit at the end of 3 years if all returns were rolled back into the CD?
A. $9,606.00
B. $11,636.18
C. $11,800.00
D. $11,910.16
E. $12,032.42
A. $9,606.00
B. $11,636.18
C. $11,800.00
D. $11,910.16
E. $12,032.42
09 Apr 2022, 15:11
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I assume the question is just asking how much $10,000 will be worth if it earns 6% each year for three years. Because of compounding, we'll earn more than 3*6% = 18% overall, which only leaves D and E. Since we're multiplying the $10,000 investment by 1.06 three times, the exact answer will be 10,000*(1.06^3). That clearly will need to end in 6 (because 1.06^3 = 106^3/100^3, and 106^3 will end in 6) so D is the only possible answer.
General Discussion
PyjamaScientist
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09 Apr 2022, 22:34
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IanStewart
Wow. I got to \(10,000*(1.06^3)\) and then was like, "Man, now do I really have to calculate this stuff for the answer". It didn't click me that as per the multiplicity rule of 6, the last digit is always going to be a 6 ! The way you incorporate all the concepts into one is just brilliant. Will try to incorporate that and broaden the usage of different concepts in different cases.
