AnswersAdvanced Financial AlgebraModeling Investments

Modeling Investments — Quiz Answers

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1
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Which scenario can be modeled using the formula A=P×(1+(r)/(n))^n⁢t ?

A
A 2 dollars comma 500 deposit that earns a flat amount of interest each year based on the amount of the initial deposit.
B
A 1 dollars comma 500 deposited into a savings account where interest is calculated on the original deposit amount once a year for 3 years.
C
A savings account with an original balance of 2 dollars comma 000, where simple interest is added once annually for 5 years.
D
A 1 dollars comma 000 investment where the interest earned is calculated on the total balance, including previously earned interest, each quarter for 4 years.
2
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Which scenario can be modeled using the formula I=P×r×t ?

A
A 1 dollars comma 000 investment where interest is added to the balance at the end of each month.
B
Monthly deposits of 200 dollars into an account where interest is added to the total balance each year.
C
A 2 dollars comma 000 investment where interest is calculated annually on the original amount invested.
D
A 1 dollars comma 500 deposit that earns interest on both the principal and accumulated interest every quarter.
5

Which scenario can be modeled using the formula A=P×(1+(r)/(n))^n⁢t ?

A
500 dollars invested in a 3-year bond earning 5 percent interest compounded annually.
B
A 50 dollars deposit that earns 1 percent simple interest on the principal once annually.
C
500 dollars deposited into a savings account that earns 2 percent simple interest annually.
D
Monthly deposits of 50 dollars into a savings account where interest is added to the total balance annually.
6

Which scenario can be modeled using the formula I=P×r×t ?

A
A 3 dollars comma 000 investment where the interest earned is added to the balance at the end of each year.
B
A 1 dollars comma 000 deposit that earns interest on both the principal and the accumulated interest monthly.
C
A 2 dollars comma 000 deposited into a savings account where the annual interest is calculated on the original deposit amount.
D
Monthly contributions of 100 dollars into an account that adds interest each month.
7

Which scenario can be modeled using the formula A=P×(((1+(r)/(n))^n⁢t−1)/((r)/(n))) ?

A
A 3 dollars comma 000 deposit into an account where interest is calculated monthly based on the original deposit amount.
B
A series of monthly deposits of 150 dollars into an account where the interest is added to the balance each month.
C
A one-time deposit of 200 dollars into an account where the interest is added annually.
D
A 1 dollars comma 000 investment where the interest is calculated only once at the end of the investment term.
8

What key phrase suggests that the formula A=P×(1+(r)/(n))^n⁢t can be used to calculate interest earned on an investment?

A
certificate of deposit
B
compound interest
C
simple interest
D
periodic deposits
10

Elliot deposited $⁢300 into a savings account with a 3% interest that compounds monthly. Which formula will correctly show Elliot how much the investment will grow after 2 years?

A
A=300×(1+31)1×2
B
A=300×(1+0.0312)12×2
C
A=300×(1+0.031)1×2
D
A=300×(1+312)12×2

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