Use the compound interest formula to compute the total amount accumulated.
-$100 for 3 years at 3% compounded quarterly
A) $109.00
B) $102.27
C) $109.38
D) $109.27

Question

Quizplus · Accepted Answer

The compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. For this problem, P = $100, r = 3% or 0.03, n = 4 (since interest is compounded quarterly), and t = 3 years. Plugging these values into the formula gives A = 100(1 + 0.03/4)^(4*3) = $109.38.

Use the Compound Interest Formula to Compute the Total Amount