Question

Porsha calculates the amount of money she will have at the end of 6 years on a $5,000 investment earning 3.75% interest compounded quarterly. She writes the following expression: 5,000 (1 0.0375) superscript 24 Which of the following statements about Porsha's expression is true? a. Porsha's expression is correct. b. Porsha's expression should have 1 0.009375 in the parentheses. c. Porsha's expression should have an exponent of 6, not 24. d. Porsha's expression should have both 1 0.009375 in the parentheses and an exponent of 6. Please select the best answer from the choices provided A B C D

Answer 1

Investment often returns with profit. The true statement is that Porsha's expression should have 1 0.009375 in the parentheses.

Since the invested amount is $5,000 and the Interest rate = 3.75% per year compounded quarterly (4)

first of all, converting of percentage into decimals is done which is:

3.75%=3.75/100 = 0.0375.

Later on, interest is quarterly, so we divide 0.0375 by 4, we get 0.009375.

Number of years = 6 years.

n=4 (number of quarters in a year)

A = 5,000 ( 1+ )

0.0375 divided by 4 gives 0.009375

So we add 10+0.009375= 10.009375.

Conclusively, we can therefore say that Porsha's expression should have 1 0.009375 in the parentheses

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