Modeling Investments — Quiz

Question 2 • Advanced Financial Algebra

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

Answer

A 1 dollars comma 000 investment where interest is added to the balance at the end of each month.

Monthly deposits of 200 dollars into an account where interest is added to the total balance each year.

A 2 dollars comma 000 investment where interest is calculated annually on the original amount invested.

A 1 dollars comma 500 deposit that earns interest on both the principal and accumulated interest every quarter.

Explanation

The formula I = P × r × t calculates simple interest: interest is based only on the original principal P for the full time t. In choice C, interest is calculated annually on the original $2,000 investment, so the formula applies. The other scenarios add interest to the balance or include regular deposits, so the interest calculation changes over time.

AI-written and checked against the verified answer.

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