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The table below shows the future value of a certificate of deposit (CD) after x years Eric states the applied interest is simple interest true or false?

The table below shows the future value of a certificate of deposit (CD) after x years-example-1
User Amer
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2 Answers

6 votes

Answer: False, or B. I wanted to confirm that the person above it correct, I checked on the test.

Explanation:

User Astrofunkswag
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2 votes

Answer:

Option B.

Explanation:

Eric states the applied interest is simple interest. We need to check whether the this statement is true or false.

In simple interest, the amount of deposit increased at a constant rate. It means the difference between future values of any two consecutive years will same.

Difference between future values of first two years.


d_1=210.13-205.00=5.13

Difference between future values of 2nd and 3rd year is


d_2=215.38-210.13=5.25

Since d₁≠d₂, therefore, the given statement is false.

Thus, the correct option is B.

User SaAction
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