Question

The expression can be used to find the total amount in a bank account when the principal dollar amount, P(1+r), is compounded annually for n years at an interest rate of r. Which of the following statements is true?

The quantity(1+r) is multiplied by P.
The quantity is (n+n.r) multiplied by P.
The quantity is (1+r) multiplied by itself n times.
The quantity is P(1+r) multiplied by itself n times.

Answer 1

Answer
The quantity is (1+r) multiplied by itself n times

Explanation
From the question m is missing. The expression should be, P〖(1+r)〗^n.
The expression means;
1). First, add r to 1.
2). The quantity (1+r) multiply by itself n times.
3). Lastly, the quantity 〖(1+r)〗^n is multiplied by P.
From the choices given, the true statement about the expression is the 3rd one, “the quantity is (1+r) multiplied by itself n times”. 

Answer 2

Answer:

Option C is correct.

Step-by-step explanation:

We are given: Principal dollar amount = P

                        Interest rate = r

                        Compounded annually for n years.

To find: Correct statement.

Since, In bank account Compund interest formula is used to calculate amount.

Compound interest formula is given by

$A=P\times(1+\frac{r}{100})^n$

$A=P\times(1+r)^n$

According to this formula, the Quantity is (1+r) multiplies by itself 2 times then P is multiplied to it.

Therefore, Option C is correct.