9
QuizMultiple Choice

Comparing Types of Interest — Quiz

Question 9 • Advanced Financial Algebra

Jack has $⁢6,000 to deposit for a term of 4 years. Bank C offers a 4.25% annual interest rate compounded annually, while Bank D offers the same rate but compounded semi-annually. What is the exact total amount Jack will have in each bank after 4 years? Compound Interest Formula: A=P⁢(1+(r)/(n))^n⁢t

Answer
A
Bank C: 7 dollars comma 158 point 2 2, Bank D: 7 dollars comma 175 point 5 4
B
Bank C: 7 dollars comma 200 point 0 0, Bank D: 7 dollars comma 190 point 0 0
C
Bank C: 7 dollars comma 150 point 0 0, Bank D: 7 dollars comma 150 point 0 0
D
Bank C: 7 dollars comma 086 point 8 9, Bank D: 7 dollars comma 099 point 1 7

Explanation

Use A = P(1 + r/n)^(nt), with P = $6,000, r = 0.0425, and t = 4. For Bank C, n = 1, so $6,000(1.0425)^4 = $7,086.89 to the nearest cent. For Bank D, n = 2, so $6,000(1 + 0.0425/2)^8 = $7,099.17 to the nearest cent. These amounts match choice D.

AI-written and checked against the verified answer.

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