3
QuizMultiple Choice

Comparing Types of Interest — Quiz

Question 3 • Advanced Financial Algebra

Jorge is evaluating two savings accounts for his $⁢2,000 investment. The first is a compound interest account with a 4% annual rate compounded semi-annually, and the second is another compound interest account with the same annual rate but compounded quarterly. He prepared a table to show the total amount after 3 years but realized there is an error. Identify the mistake in Jorge's table. Investment Type Interest Rate Compounding Frequency Total Amount after 3 Years Semi-Annual Compounding 4% Semi-Annually $⁢2,254.43 Quarterly Compounding 4% Quarterly $⁢2,253.65 Compound Interest Formula: A=P⁢(1+(r)/(n))^n⁢t

Answer
A
Both amounts are incorrect.
B
The table is correct.
C
The quarterly compounding amount is incorrect.
D
The semi-annual compounding amount is incorrect.
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